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Buy-side vs. sell-side analysts’ earnings forecasts. Financial analysts who make forecasts of stock prices are categorized as either “buy-side” analysts or “sell-side” analysts. Refer to the Financial Analysts Journal (July/August 2008) comparison of earnings forecasts of buy-side and sell-side analysts, Exercise 2.86 (p. 88). The mean and standard deviation of forecast errors for both types of analysts are reproduced in the table. Assume that the distribution of forecast errors are approximately
- a. Find the probability that a buy-side analyst has a forecast error of +2.00 or higher.
- b. Find the probability that a sell-side analyst has a forecast error of + 2.00 or higher.
Buy-Side Analysts | Sell-Side Analysts | |
Mean | 0.85 | −0.05 |
Standard Deviation | 1.93 | 0.85 |
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Statistics For Business And Economics, University Of Connecticut
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