# 420Hw05 - STAT 420 Homework #5 (due Friday, September 28,...

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Fall 2007 Homework #5 (due Friday, September 28, by 3:00 p.m.) 1. Suppose that company A and company B are in the same industry sector, and the prices of their stocks, \$X per share for company A and \$Y per share for company B, vary from day to day randomly according to a bivariate normal distribution with parameters μ X = 45, σ X = 5.6, μ Y = 25, σ Y = 5, ρ = 0.8. a) What is the probability that on a given day the price of stock for company B ( Y ) exceeds \$33? b) Suppose that on a given day the price of stock for company A ( X ) is \$52. What is the probability that the price of stock for company B ( Y ) exceeds \$33? c) Alex bought 5 shares of company A stock and 3 shares of company B stock. What is the probability that on a given day the value of his portfolio ( 5 X + 3 Y ) is below \$250? d) What is the probability that 1 share of company A stock is worth more than 2 shares of company B stock? From the textbook:

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## This note was uploaded on 04/29/2010 for the course STAT stat 420 taught by Professor Stepanov during the Spring '07 term at University of Illinois at Urbana–Champaign.

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420Hw05 - STAT 420 Homework #5 (due Friday, September 28,...

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