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Tutorial 6

The document presents a series of statistical questions related to starting salaries for new college graduates in health sciences and business, wedding costs, and returns on large-cap domestic stock funds. It includes calculations of probabilities and thresholds based on normal distributions for each scenario. The document aims to apply statistical concepts to real-world financial situations.

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0 views1 page

Tutorial 6

The document presents a series of statistical questions related to starting salaries for new college graduates in health sciences and business, wedding costs, and returns on large-cap domestic stock funds. It includes calculations of probabilities and thresholds based on normal distributions for each scenario. The document aims to apply statistical concepts to real-world financial situations.

Uploaded by

ashoksingh.nic
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Tutorial 6

Q1. According to the National Association of Colleges and Employers, the


2015 average starting salary for new college graduates in health sciences
was $51,541. The average starting salary for new college graduates in
business was $53,901 (National Association of Colleges and Employers
website). Assume that starting salaries are normally distributed and that the
standard deviation for starting salaries for new college graduates in health
sciences is $11,000. Assume that the standard deviation for starting salaries
for new college graduates in business is $15,000.
a. What is the probability that a new college graduate in business will earn a
starting salary of at least $65,000?
b. What is the probability that a new college graduate in health sciences will
earn a starting salary of at least $65,000?
c. What is the probability that a new college graduate in health sciences will
earn a starting salary less than $40,000?
d. How much would a new college graduate in business have to earn in order
to have a starting salary higher than 99% of all starting salaries of new
college graduates in the health sciences?

Q2. The XO Group Inc. conducted a 2015 survey of 13,000 brides and
grooms married in the United States and found that the average cost of a
wedding is $29,858 (XO Group website). Assume that the cost of a wedding
is normally distributed with a mean of $29,858 and a standard deviation of
$5,600.
a. What is the probability that a wedding costs less than $20,000?
b. What is the probability that a wedding costs between $20,000 and
$30,000?
c. For a wedding to be among the 5% most expensive, how much would it
have to cost?

Q3. The average return for largecap domestic stock funds over three years
was 14.4%. Assume the threeyear returns were normally distributed across
funds with a standard deviation of 4.4%.
a. What is the probability an individual largecap domestic stock fund had a
threeyear return of at least 20%?
b. What is the probability an individual largecap domestic stock fund had a
threeyear return of 10% or less?
c. How big does the return have to be to put a domestic stock fund in the top
10% for the threeyear period?

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