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

question 97

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 less than 11.5%.

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Definitions:

Cognitive Development

The process by which a child learns to reason, solve problems, and think consciously as they grow older.

Lev Vygotsky

A Russian psychologist who developed theories on social cognitive development, emphasizing the role of social interactions and cultural tools in the development of thinking and learning.

Logical Principles

Fundamental concepts that underpin valid reasoning and the structure of logical arguments.

Jean Piaget

A Swiss psychologist known for his pioneering work in child development, specifically his theory of cognitive development stages.