As discussed in the text, it often is possible to use a theoretical distribution as an approximation
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Consider the solar trash compactor data again. We calculated the sample mean x = $1,005 and the sample standard deviation s = $204.Taking these as approximately equal to μ and Ï, find the normal cumulative probabilities for operating costs of $700, $800, $900,$1,000, $1,200, and $1,400. How do these theoretical normal probabilities compare with the data-based probabilities from the CDFin Figure 10.7? Do you think that the normal distribution is an
Figure 10.7
Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...
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Making Hard Decisions with decision tools
ISBN: 978-0538797573
3rd edition
Authors: Robert Clemen, Terence Reilly
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