Question: An Internet based trading service, Speculate.com, estimates that at the end of the day the return on $1 invested in day-trading is normally distributed. Speculate.com's

An Internet based trading service, Speculate.com, estimates that at the end of the day the return on $1 invested in day-trading is normally distributed. Speculate.com's trading records suggest that, on average, $1 invested in day-trading is worth only 95c at the end of the day

(i.e., day-traders lose money as a group even though there might be some individual day traders who make a fortune).

The records also suggest a 45% chance that a $1 day-trading investment will turn out profitable at the end of the day.

a)Find the standard deviation of the return at the end of the day on $1 invested in day-trading.

b) Some analysts do not completely agree with the estimates provided by Speculate.com. While they do agree that at the end of the day the return on $1 invested in day-trading is normally distributed, they believe that, on average, it will be worth only 90c with a standard deviation of 20c. Using the analysts' estimates, find the probability that $1 invested in day-trading will be worth more than $1.25 at the end of the day.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Mathematics Questions!

Stephenson Real Estate Company was founded 25 years ago by the current CEO, Robert Stephenson. The company purchases real estate, including land and buildings, and rents the property to tenants. The...

Speculate.com is an online trading company. The company is worried about the continual market slide, which seems to have resulted in a significant decline in both the total number of trades...

A sizeable proportion of Speculate.com customers seem to be day-traders (i.e., speculators in volatile stocks that close their positions at the end of every trading day). Speculate.com estimates that...

Corporate Finance Course it's about Whole Foods purchase by Amazon. below are the questions need to be answered, also the documents are attached. QUESTIONS: 1.The investment thesis on AMZN has ALWAYS...

Hi, I was wondering if you can help me with some financial accounting work? I need help in computing the numbers for Forecast Values for 2024 for Humana using the information below. I have a sample...

Resources:Appendix A, The Home Depot, Inc. Annual Report inFundamentals of Financial Accounting Writea 1,050- to 1,750-word paper in which you address the following:...

Resources:Appendix A: The Home Depot, Inc. Annual Report inFundamentals of Financial Accounting Writea 1,050- to 1,750-word paper in which you answer the following questions: What does the...

Resources: Appendix A: The Home Depot, Inc. Annual Report in Fundamentals of Financial Accounting Write a 1,050- to 1,750-word paper in which you answer the following questions: What does the...

HELP!! I don't think the tutor answered did this assignment properly and I am way behind on my other assignments. Can someone please help me? Writea 1,050- to 1,750-word paper in which you address...

Attached is the document to use as a resource. Write a 1,050- to 1,750-word paper in which you answer the following questions: What does the Consolidated Statements of Earningsthe income...

Individual Financial Statements Paper Part 1 Resources: Appendix A: The Home Depot, Inc. Annual Report in Fundamentals of Financial Accounting Write a 1,050- to 1,750-word paper in which you answer...

Choose a local company, and discuss in detail how it has adopted technology in its operations, and how the managerial responsibilities have changed because of these technologies. Discuss the new...

Lord Suirdale (Richard Michael John Hely-Hutchinson) sued Brayhead Ltd for losses incurred after a failed takeover deal. The CEO, chairman and de facto managing director of Brayhead Ltd, Mr....

What were the primary factors that led to the sudden collapse of Silicon Valley Bank ( SVB ) ?

A company is preparing completing their Cash Budget. The following data has been prepared for cash receipts and payments. January February March Cash receipts $1,061,200 $1,182,400 $1,091,700 Cash...