Hi David,
The answer of 6.352% is explained on page 77 as:
Prob(mixture)[x<0] = 0.3 * 4.760% * 0.7 * 2.28% = 6.352%
The above calc would seem to yield 0.0228% so I'm suspecting there's a typo and it should really be a sum? Also for the 1st component z-value of -1, my table (standard normal cumulative probability) shows 15.87%, so multiplying by the 0.3 probability weight should give us 4.761%. For the 2nd component, I get a weighted probability of 1.596% (0.7 weight * 2.28%). Adding both, I would expect the answer to be 6.357%.
Can you please confirm if my understanding is correct of if I'm completely off base here?
thanks
The answer of 6.352% is explained on page 77 as:
Prob(mixture)[x<0] = 0.3 * 4.760% * 0.7 * 2.28% = 6.352%
The above calc would seem to yield 0.0228% so I'm suspecting there's a typo and it should really be a sum? Also for the 1st component z-value of -1, my table (standard normal cumulative probability) shows 15.87%, so multiplying by the 0.3 probability weight should give us 4.761%. For the 2nd component, I get a weighted probability of 1.596% (0.7 weight * 2.28%). Adding both, I would expect the answer to be 6.357%.
Can you please confirm if my understanding is correct of if I'm completely off base here?
thanks
