In: Math
The daily exchange rates for the five-year period 2003 to 2008 between currency A and currency B are well modeled by a normal distribution with mean 1.814 in currency A (to currency B) and standard deviation 0.035 in currency A. Given this model, and using the 68-95-99.7 rule to approximate the probabilities rather than using technology to find the values more precisely, complete parts (a) through (d).
Question: a) What would the cutoff rate be that would separate the highest 2.5% of currency A/currency B rates? The cutoff rate would be ___________ (type an integer or a decimal rounded to the nearest thousandth as needed)
Question: What would the cutoff rate be that would separate the highest 50% ? The cutoff rate would be _______________
Question: What would the cutoff rate be that would separate the middle 68% ? The lower cutoff rate would be ____________
Question: The upper cutoff rate would be ? ____________________
Question: What would the cutoff rate be that would separate the highest 16%? ________________
Using the 68-95-99.7 rule, we can write
68% values lie between (mean - standard deviation, mean + standard deviation) = (1.814 - 0.035, 1.814 + 0.035) = (1.779, 1.849)
95% values lie between (mean - 2*standard deviation, mean + 2*standard deviation) = (1.814 - 2*0.035, 1.814 + 2*0.035) = (1.744, 1.884)
99.7% values lie between (mean - 3*standard deviation, mean + 3*standard deviation) = (1.814 - 3*0.035, 1.814 + 3*0.035) = (1.709, 1.919)
a) (100-95) = 5% values lie outside the interval (1.744, 1.884)
Among them, 2.5% values lie above 1.884
The cutoff rate be that would separate the highest 2.5% of currency A/currency B rates = 1.884
b) 50% values lie below the mean = 1.814 and 50% values lie above the mean = 1.814
The cutoff rate be that would separate the highest 50% = 1.814
c) The cutoff rate be that would separate the middle 68% = (1.779, 1.849)
d) (100 - 68) = 32% values lie outside the interval (1.779, 1.849)
Among them, 16% values lie above 1.849
The cutoff rate be that would separate the highest 16% = 1.849