A fiNancial Analyst Wanted to Determine the Mean Annual Return

question 13

Multiple Choice

A financial analyst wanted to determine the mean annual return on mutual funds. A random sample
Of 60 returns shows a mean of 12%. If the population standard deviation is assumed to be 4%,
Estimate with 95% confidence the mean annual return on all mutual funds.

• A) 11.325% to 13.012%
• B) 10.988% to 14.025%
• C) 11.325% to 14.025%
• D) 10.988% to 13.012%
• E) 8% to 16%

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Definitions:

Yield

The income returned on an investment, often expressed as an annual percentage of the cost or market value of the investment.

Discount Rate

The interest rate charged to commercial banks and other depository institutions for loans received from the Federal Reserve's discount window.

Duration

Duration measures a bond's sensitivity to changes in interest rates, representing the weighted average time to receive the bond's cash flows.

Payments

Transactions or transfers of money from one person or entity to another.