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

question 182

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 more than 7.5%.

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Definitions:

Societal Utility

The degree to which something meets the needs and contributes to the well-being or benefit of society.

Means of Production

The physical and non-physical inputs used in the production of goods and services, such as factories, machinery, and labor.

Duty-Based Ethics

A moral philosophy that emphasizes the adherence to a set of rules or duties as the basis for ethical behavior.

Mission Statements

Formal summary statements that define the purpose, goals, and values of an organization or company.