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

question 183

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, 10% of the annual returns will be less than what amount?

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Definitions:

Voluntary Movement

Movement controlled by the individual's conscious mind, primarily involving the skeletal muscle system.

Homeostasis

The process by which a living organism or cell maintains a stable internal environment despite changes in external conditions.

Reticular Activating System

A network of neurons in the brainstem that plays a key role in regulating wakefulness and sleep-wake transitions.

Cerebral Cortex

The outer layer of the cerebrum composed of gray matter and consisting mainly of nerve cell bodies.