SCENARIO 6-5 According to Investment Digest, the Arithmetic Mean of the Annual

question 37

Short Answer

SCENARIO 6-5
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 6-5, find the probability that the annual return of a random year will be
between 7.5% and 11%.

---

Definitions:

Waterbirth

A birthing process where childbirth occurs in water, typically a pool, to reduce pain and facilitate delivery.

Acupuncture

Acupuncture is a form of traditional Chinese medicine involving the insertion of very thin needles through the skin at strategic points on the body, used for therapeutic purposes or to alleviate pain.

Postpartum Depression

Characteristic of women who have such strong feelings of sadness, anxiety, or despair that they have trouble coping with daily tasks during the postpartum period.

Symptoms

Signs or manifestations of a disease or disorder experienced by an individual, which are indicative of an underlying condition.