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Under the system of floating exchange rates, the rate of foreign money to the U.S. dollar is affected by many random factors, and this leads to the assumption of a normal distribution of small daily fluctuations. The rate of U.S. dollar per euro is believed in April 2007 to have a mean of 1.36 and a standard deviation of 0.03. Find the following.
a. The probability that tomorrow's rate will be above 1.42.
b. The probability that tomorrow's rate will be below 1.35.
c. The probability that tomorrow's exchange rate will be between 1.37 and 1.41.
Please explain the notation you used for your random variable and its distribution.
For each of the sections, please submit your calculations (performed using a calculator and the normal distribution table).
In addition, please check your answers with Excel, and submit the formulae you used in Excel for each of the sections.
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