Question

Suppose that we wish to predict whether a given stock will issue a dividend this year (`Yes'or `No') based on X, last year's percent profit.

Suppose that we wish to predict whether a given stock will issue a dividend this year ('Yes' or 'No') based on X, last year's percent profit. We examine a large number of companies and discover that X- 12 for dividend providing companies, while the mean for those that didn't was X 1.5. In addition, the variance of X for both sets of companies was ơ2-36. Finally, 75% of companies issued dividends. Assuming that X follows a normal distribution, predict the probability that a company will issue a dividend this year given that its percentage profit was X - 4 last year.

Answer 1

The probability that a company will issue a divedend this year given that its percentage profit was x = 4 years will be predicted by using given formula

2πσ exp (-20 2πσ

here x=4, σ² = 36 i.e 2σ² = 72 , μ_k = 12 , μ_l = 1.5 ,

V) 2 0-31

The probability that a company will issue a divedend this year given that its percentage profit was x = 4 years will be 0.62