A consensus forecast is the average of a large number of individual analysts' forecasts. Suppose the individual forecasts for a particular interest rate are normally distributed with a mean of 5.0 percent and a standard deviation of 1.2 percent. A single analyst is randomly selected. Find the probability that his/her forecast is(a) At least 3.5 percent. (Round the z value to 2 decimal places. Round your answer to 4 decimal places.)(b) At most 6 percent. (Round the z value to 2 decimal places. Round your answer to 4 decimal places.)(c) Between 3.5 percent and 6 percent. (Round the z value to 2 decimal places. Round your answer to 4 decimal places.)

Respuesta :

Answer:

a) [tex]P(X>3.5)=P(\frac{X-\mu}{\sigma}>\frac{3.5-\mu}{\sigma})=P(Z>\frac{3.5-5}{1.2})=P(z>-1.25)[/tex]

And we can find this probability using the complement rule:

[tex]P(z>-1.25)=1-P(z<-1.25)= 1-0.1057=0.8944 [/tex]

b) [tex]P(X<6)=P(\frac{X-\mu}{\sigma}<\frac{6-\mu}{\sigma})=P(Z<\frac{6-5}{1.2})=P(z<0.83)[/tex]

And we can find this probability uing the normal standard table:

[tex]P(z<0.83)=0.7967 [/tex]

c) [tex]P(3.5<X<6)=P(\frac{3.5-\mu}{\sigma}<\frac{X-\mu}{\sigma}<\frac{6-\mu}{\sigma})=P(\frac{3.5-5}{1.2}<Z<\frac{6-5}{1.2})=P(-1.25<z<0.83)[/tex]

And we can find this probability with this difference:

[tex]P(-1.25<z<0.83)=P(z<0.83)-P(z<-1.25)[/tex]

And in order to find these probabilities we can use tables for the normal standard distribution, excel or a calculator.  

[tex]P(-1.25<z<0.83)=P(z<0.83)-P(z<-1.25)=0.7967-0.1057= 0.6910[/tex]

Step-by-step explanation:

Previous concepts

Normal distribution, is a "probability distribution that is symmetric about the mean, showing that data near the mean are more frequent in occurrence than data far from the mean".

The Z-score is "a numerical measurement used in statistics of a value's relationship to the mean (average) of a group of values, measured in terms of standard deviations from the mean".  

Part a

Let X the random variable that represent the variable of interest of a population, and for this case we know the distribution for X is given by:

[tex]X \sim N(5,1.2)[/tex]  

Where [tex]\mu=5[/tex] and [tex]\sigma=1.2[/tex]

We are interested on this probability

[tex]P(X>3.5)[/tex]

And the best way to solve this problem is using the normal standard distribution and the z score given by:

[tex]z=\frac{x-\mu}{\sigma}[/tex]

If we apply this formula to our probability we got this:

[tex]P(X>3.5)=P(\frac{X-\mu}{\sigma}>\frac{3.5-\mu}{\sigma})=P(Z>\frac{3.5-5}{1.2})=P(z>-1.25)[/tex]

And we can find this probability using the complement rule:

[tex]P(z>-1.25)=1-P(z<-1.25)= 1-0.1057=0.8944 [/tex]

Part b

We are interested on this probability

[tex]P(X<6)[/tex]

And the best way to solve this problem is using the normal standard distribution and the z score given by:

[tex]z=\frac{x-\mu}{\sigma}[/tex]

If we apply this formula to our probability we got this:

[tex]P(X<6)=P(\frac{X-\mu}{\sigma}<\frac{6-\mu}{\sigma})=P(Z<\frac{6-5}{1.2})=P(z<0.83)[/tex]

And we can find this probability uing the normal standard table:

[tex]P(z<0.83)=0.7967 [/tex]

Part c

[tex]P(3.5<X<6)=P(\frac{3.5-\mu}{\sigma}<\frac{X-\mu}{\sigma}<\frac{6-\mu}{\sigma})=P(\frac{3.5-5}{1.2}<Z<\frac{6-5}{1.2})=P(-1.25<z<0.83)[/tex]

And we can find this probability with this difference:

[tex]P(-1.25<z<0.83)=P(z<0.83)-P(z<-1.25)[/tex]

And in order to find these probabilities we can use tables for the normal standard distribution, excel or a calculator.  

[tex]P(-1.25<z<0.83)=P(z<0.83)-P(z<-1.25)=0.7967-0.1057= 0.6910[/tex]