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

question 143

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

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Definitions:

Sensory Changes

Alterations in how one perceives sensory stimuli, often due to aging or neurological conditions, affecting sight, hearing, taste, touch, and smell.

Visual Acuity

The clarity of vision or sharpness of eyesight, often measured by the ability to discern letters or numbers at a given distance.

Teenage Years

A developmental phase following early childhood, typically between ages 13 to 19, characterized by physical, psychological, and emotional changes.

Fetal Stage

The stage that begins with the third month of pregnancy and ends with childbirth, during which organ systems mature and there are gains in size.