SCENARIO 6-4 According to Investment Digest, the Arithmetic Mean of the Annual

question 28

Short Answer

SCENARIO 6-4
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 6-4, find the probability that the annual return of a random year will be between 7.5% and 11%.

---

Definitions:

Mineral Water

A type of water that contains various minerals and is often bottled and sold for consumption.

Monopsonist

A market condition where there is only one buyer facing many sellers, giving the buyer substantial control over the market price.

Supply Curve

A visual diagram illustrating the connection between a product's price and the amount of the product that sellers are prepared to offer.

Marginal Cost Curve

A graphical representation showing how the cost to produce one additional unit of a good changes as production volume changes.