### Exercise 1: Baggage Fees

Problem 3.34 on page 124.

a) The average revenue per customer is $15.7.  The standard deviation is 22.77.
b) The airline should expect a total revenue of 1884 for a flight with 120 passengers.  The standard deviation is

### Exercise 2: Scooping ice cream

Exercise 3.44 on page 130.

a) At this party we could expect between 52.8125 and 55.1875 ounces of icecream to be served.  The standard deviation is 1.089.
b) The amount of icecream left in the box after one scoop is expected to be between 44.9375 and 47.0625 ounces.  The standard deviation is 1.031.
c) We add variances to show the range of values that are most possible because life isn't perfect.


### Exercise 3: CAPM

Problem 4.8 on page 143. You may use pnorm and qnorm to do the area or quantile calculations, but be sure to explain the calculations. We want to make sure you know how to do these calculations.

a) The percent of portfolios that lose money are 29.39% (calculated by finding out how many standard deviations from the mean 0 is (Z score) the solving for x to get the area under the curve)
b) The cut off for the highest 15% of annual returns is an annual return on investment of 84%.