Question

Because of tough economic times, the Indiana legislature is debating a bill that could have significant negative implications for public school funding. There are three possibilities for this bill:
(1) it could be passed in essentially its current version;
(2) it could be passed but with amendments that make it less harsh on public school funding; or
(3) it could be defeated. The probabilities of these three events are estimated to be 0.4, 0.25, and 0.35, respectively.
The estimated effect on percentage changes in salaries next year at Indiana University are estimated as follows. If the bill is passed in its current version, the mean and standard deviation of salary percentage change will be 0% and 1%. If the bill is passed with amendments, the mean and standard deviation will be 1.5% and 3.5%. Finally, if the bill is defeated, the mean and standard deviation will be 3.5% and 6%. Find the mean and standard deviation of the percentage change in salaries next year at Indiana University.



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  • CreatedApril 01, 2015
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