Financial analysts who make forecasts of stock prices are categorized as either “buy-side” analysts or “sell-side”analysts. The mean and standard deviation of the forecast errors for both types of analysts are shown in the table-Assume that the distribution of forecast errors are approximately normally distributed.
Buy-Side Analysts
Sell-Side Analysts
Mean (.86)
Mean (-0.05)
Standard deviation (1.93)
Standard deviation (0.86)
Find the probability that a buy-side analyst has a forecast error of +2.01 or higher.
Find the probability that a sell-side analyst has a forecast error of +2.01 or higher.
Both round to three decimal places as needed.