Question

7: Suppose you purchase shares of stock in five different companies. Assume that 70% of each of these investments will increase in value, and the performance of each company's stock is independent of one another, and that the probability distribution for x, the number of successful investments out of the five is as follows: 0 2 3 4 5 P) .002 .029 132 309 360 168 Find the mean of the discrete random variable, x, then use the mean to find the variance, o and the standard deviation, o.

Answer 1

Mean $=E(x)=\sum x*P(x)=3.5$

Variance $=V(x)=\sum x^2*P(x)-\left ( \sum x*P(x) \right )^2=13.298-(3.5)^2=1.048$

Standard deviation $=\sqrt{V(x)}=1.024$

2 0.002 0.029 0.132 0.309 0.36 0.168 0.029 40.264 0.528 2.781 5.76 4.2 3.5 13.298 16 25 0.927 1.44 0.84 Tota