The closing price of Schnur Sporting Goods, Inc., common stock is uniformly distributed between $21 and 36 per share.Exercises
What is the probability that the stock price will be:
(a) More than $28
"Uniformly distributed" means that there is an equal frequency for all values.
(36-29)/(36-21) = ?
.4666
To calculate the probability that the stock price will be more than $28, we need to find the proportion of the uniform distribution that lies above $28.
1. Calculate the total range of the distribution:
Range = Upper limit - Lower limit = $36 - $21 = $15
2. Calculate the portion of the distribution that lies below $28:
Portion below $28 = $28 - Lower limit = $28 - $21 = $7
3. Calculate the probability of the stock price being more than $28:
Probability = (Total range - Portion below $28) / Total range
= ($15 - $7) / $15
= $8 / $15
≈ 0.5333 or 53.33%
Therefore, the probability that the stock price will be more than $28 is approximately 53.33%.