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

question 59

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 two values that will bound the middle 50% of the annual returns?

Recognize the inefficiencies in resource allocation associated with common resources and public goods.

Understand how the private market's response to nonexcludable and nonrival goods leads to market failure.

Analyze the role of government intervention in correcting market failures related to public goods and common resources.

Distinguish between the economic outcomes of goods that are nonrival or rival in consumption and those that are excludable or nonexcludable.

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Definitions:

Smaller Percentage

A proportionally less significant part or fraction of a whole, often used to compare relative sizes or amounts.

Interest Rate

A charge applied by lenders for loaning out assets, calculated as a fraction of the principal amount.

Exchange Rate

The price at which one country's currency can be exchanged for another country's currency.

Domestic Investment

Domestic investment pertains to the total amount of money spent on capital goods, services, and structures within a country.