Question

You want to invest in companies belonging to Gispa Group of

1
Companies, Inc. so you did some research and found out that companies belonging to this group has an average gain of
0.8
percent and standard deviation of
0.7
percent. Given that a positive percent (gain) means profit and a negative percent means a loss. If you choose
20
companies, what is the probability that the companies are gaining more than
1
percent?

Answer 1

0.1007

Explanation:

Given :

Average gain, μ = 0.8

Standard deviation, σ = 0.7

Number of companies, n = 20

Obtaining the standardized value ;

Zscore = (x - mean) / (σ/√n)

Zscore = (1 - 0.8) / (0.7/√20)

Zscore = (0.2 / 0.1565247)

Z = 1.27775

Using the Z probability calculator :

P(Z > 1.27775) = 0.10067

P(Z > 1.27775) = 0.1007 ( Z probability calculator)