PROBLEM 19.23 (a) Use the relations in Section 19.4 for continuous variables to determine the expected value and standard deviation for the distribution of f(DY) in Problem 19.11. (b) It is possible to calculate the probability of a continuous variable Y between two points (a, b) using the following integral:
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Problem 19.11
Carla is a statistician with a bank. She has collected debt-to-equity mix data on mature (M) and young (Y) companies. The debt percentages vary from 20% to 80%. Carla has defined DM as a variable for the mature companies from 0 to 1, with DM = 0 interpreted as the low of 20% debt and DM = 1.0 as the high of 80% debt. The variable for young corporation debt percentages DY is similarly defined. The probability distributions used to describe DM and DY are
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