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

question 70

Short Answer

TABLE 6-6
According to Investment Digest, the arithmetic mean of the annual return for common stocks from 1926-2010 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 Table 6-6, find the probability that the annual return of a random year will be between 7.5% and 11%.

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Definitions:

Methane

A simple hydrocarbon with the formula CH4, representing the simplest alkane and the main component of natural gas.

Termination Reaction

A chemical reaction that halts the growth of a polymer chain by removing reactive intermediates, ending the polymerization process.

Photochemically Initiated

Describes a process or reaction that begins when light energy is absorbed by a chemical substance.

Methane

A colorless, odorless, flammable gas that is the simplest alkane, consisting of one carbon atom bonded to four hydrogen atoms.