Independent solution

How to solve this Exponential Distribution question

Setup

Setup

Let d be the fixed threshold component. For an exponential variable, the mean equals the standard deviation, so the rate is 1/sigma.

S(x)=Pr(L>x)=ex/σS(x)=\Pr(L>x)=e^{-x/\sigma}
S(d+σ)=0.20S(d+\sigma)=0.20

Model

Model

Relate the desired survival probability to the known one by taking their ratio.

S(d+0.5σ)S(d+σ)=e(d+0.5σ)/σe(d+σ)/σ\frac{S(d+0.5\sigma)}{S(d+\sigma)}=\frac{e^{-(d+0.5\sigma)/\sigma}}{e^{-(d+\sigma)/\sigma}}
S(d+0.5σ)S(d+σ)=e0.5\frac{S(d+0.5\sigma)}{S(d+\sigma)}=e^{0.5}

Compute

Compute

Multiply the supplied tail probability by the exponential factor for a half-standard-deviation reduction in the threshold.

S(d+0.5σ)=0.20e0.5S(d+0.5\sigma)=0.20e^{0.5}
S(d+0.5σ)=0.3297442541S(d+0.5\sigma)=0.3297442541\ldots

Answer

Answer

The requested probability rounds to 0.33.

0.33(A)\boxed{0.33\quad\text{(A)}}