Calculate the expected value of returns of stock

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Reference no: EM1385388

Question 1. Harvey's Muffler offers a full refund to anyone who is not satisfied with the replacement of mufflers. The owners believe the muffler repair results from car to car are independent and that the probability a customer will ask for refund is 0.30.Suppose a random sample of six cars is observed what is the probability of two refunds in six cars.

Required:

Consider this situation to be a binomial experiment, use Minitab to generate a probability distribution two refunds in six cars and graph and discuss the probability distribution . What is the probability that two customers will ask for refund?

Question 2. The following data relates to the return of stocks (A & B) depending on the state of Canadian economy in 2013.

1614_Calculate the expected value of returns of stock.png

Required:

Using Minitab

(a) Calculate the expected value of returns of stock A & B ?

(b) Calculate the variance of returns of Stock A & B?

(c) Which stock would you prefer to invest? And why?

Question 3. The distribution for the number of defects per tile made be Heritage Tile is Poisson distributed with a mean of 3 defects per tile. The manager is worried about the high variability.

Required:
Using Minitab and generate the poisson distribution and comment on the spread in the distribution of possible defects.

Question 4. Lorained Corporation is planning to market a new makeup product. According to the analysis made the financial department of the company, it will earn an annual profit of $4.5 million if the product has high sales, it will earn an annual profit of $1.2 million if the sales are mediocre and it will lose $2.3 million a year if the sales are low. The probabilities of three scenarios are 0.32, 0.51 and 0.17 respectively.

Required:

Using Minitab estimate the expected value of its profits (in millions) and standard deviation of profits.

Reference no: EM1385388

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