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

question 45

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
more than 11.5%.

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Definitions:

Self-Esteem

An individual’s overall subjective emotional evaluation of their own worth or personal value.

Stressing Events

Situations or occurrences that provoke stress, causing emotional or physical strain or tension.

Discrepancies

Differences or inconsistencies between two or more facts, figures, opinions, or outcomes.

Self-Esteem

An individual's subjective evaluation of their own worth, encompassing beliefs and emotions about oneself.