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

question 87

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, 10% of the annual returns will be at least what amount?

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Definitions:

Segmented Information

Financial information that is presented for different divisions, segments, or geographical locations of a company to provide insight into its performance.

Financial Analysis

The evaluation of a business's financial statements to understand its performance, trends, and financial health.

Consolidated Statements

Financial reports that aggregate the financial position and operations of a parent company and its subsidiaries as one single entity.

Operating Loss

A financial situation where a company's operating expenses exceed its gross profits.