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

question 69

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 less than 7.5%.

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Definitions:

Holter Monitor

A device that attaches electrodes to a patient’s chest for the purpose of obtaining a 24-hour ECG tracing in an accessory tape recorder.

ECG Electrodes

Small, adhesive patches used during an electrocardiogram (ECG) to detect electrical activity of the heart and record it.

Chest Wall

The structure comprising the ribs, sternum, and spine that encloses and protects the thoracic cavity and its contents.

Routine Annual Physical Examination

A yearly health checkup that includes a general physical exam and various tests to assess an individual's health.