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

question 57

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, 75% of the annual returns will be lower than what value?

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Definitions:

Elaboration Likelihood Model

A theory in social psychology that proposes two routes to persuasion: the central route, which deals with the logical processing of information, and the peripheral route, which involves more superficial processing.

Mere Exposure Effect

A psychological phenomenon where individuals develop a preference for things simply because they are familiar with them.

Proximity

The physical closeness or distance between two points or objects, often influencing the relationship or interaction between them.

Similarity

The state or fact of being alike or having common features, which can lead to the grouping of objects or ideas in cognitive processes.