SCENARIO 6-6 According to Investment Digest,the Arithmetic Mean of the Annual Return

question 63

Short Answer

SCENARIO 6-6
According to Investment Digest,the arithmetic mean of the annual return for common stocks over an 85-year period was 9.5% but the value of the variance was not mentioned.Also 25% of the annual returns were below 8% while 65% of the annual returns were between 8% and 11.5%.The article claimed that the distribution of annual return for common stocks was bell-shaped and approximately symmetric.Assume that this distribution is normal with the mean given above.Answer the following questions without the help of a calculator,statistical software or statistical table.
-Referring to Scenario 6-6,what is the value above which will account for the highest 25% of the possible annual returns?

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