1. You are traveling abroad on one of those delightful immersion courses and have only US Dollars with you. Cash is king when you visit a local craft market so you need to exchange a few dollars into the local currency. Just before you board the bus that will take you to the market area, you find a friendly chap named Narendra who is willing to trade rupees for dollars at the rate of 60 rupees to the dollar. Your guide warns you that in the market area, the best you can hope for is 45 rupees to the dollar. Narendra assures you that after your day of shopping, he would graciously sell your dollars back to you at the rate of 70 rupees to the dollar ("Administrative costs, " Narendra explains, "and my overhead is absolutely killing me!"). As an independently wealthy MBA student, you guesstimate that your expenses in town will be normally distributed with a mean of 2000 rupees and a standard deviation of 200 rupees. What's the best amount of dollars to convert to rupees before you hop on the bus for a glorious day of shopping?

Answer rating: 100% (QA)

To solve this problem we need to find the optimal amount of dollars to exchange for rupees to minimi... View the full answer