There is some evidence that, in the years 1981-85, a simple name change resulted in a...

90.2K

Verified Solution

Question

Basic Math

There is some evidence that, in the years 1981-85, a simple namechange resulted in a short-term increase in the price of certainbusiness firms' stocks (relative to the prices of similar stocks).(See D. Horsky and P. Swyngedouw, "Does it pay to change yourcompany's name? A stock market perspective," Marketing Science v.6,pp. 320-35,1987.) Suppose that, to test the profitability of namechanges in the more recent market (the past five years), we analyzethe stock prices of a large sample of corporations shortly afterthey changed names, and we find that the mean relative increase instock price was about 0.89%, with a standard deviation of 0.16%.Suppose that this mean and standard deviation apply to thepopulation of all companies that changed names during the past fiveyears. Complete the following statements about the distribution ofrelative increases in stock price for all companies that changednames during the past five years.

(a) According to Chebyshev's theorem, at least of the relativeincreases in stock price lie between 0.57 % and 1.21 %.

(b) According to Chebyshev's theorem, at least of the relativeincreases in stock price lie between 0.65 % and 1.13 %.

(c) Suppose that the distribution is bell-shaped. According tothe empirical rule, approximately of the relative increases instock price lie between 0.57 % and 1.21 %. (d) Suppose that thedistribution is bell-shaped. According to the empirical rule,approximately 99.7% of the relative increases in stock price liebetween % and %.

Answer & Explanation Solved by verified expert
3.8 Ratings (744 Votes)
    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students