Q02 (25 Marks)

Q02 - Part A (10 Marks)

The following contingency table shows average yield and average duration for 38 bond funds.

For a randomly chosen bond fund, find the probability that,

i. The bond fund is of long duration

ii. The bond fund has high yield

iii. The bond fund has high yield given that it is of short duration

iv. The bond fund is of short duration given that it has high yield

Q02 - Part B (15 Marks)

Daily output of an oil refinery is normally distributed with a mean of 116,000 barrels of crude oil per day with a standard deviation of 3500 barrels (You may use tables or Excel to calculate the probabilities.)

i.What is the probability of producing at 116000 barrels?

ii.What is the probability of producing between 116000 barrels and 119500 barrels?

iii.What is the probability of producing less than 119500 barrels?

iv.What is the probability of producing less than 122500 barrels?

v.What is the probability of producing more than 112500 barrels?

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