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

question 90

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, what is the value above which will account for the highest 25% of the possible annual returns?

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Definitions:

Spotted

Marked with spots; a pattern that can occur naturally in skins, coats, leaves, etc., often for camouflage or signaling.

Incomplete Dominance

Inheritance pattern in which one allele is not fully dominant over another, so the heterozygous phenotype is an intermediate blend between the two homozygous phenotypes.

Heterozygotes

Individuals having two different alleles at a locus, resulting in a variation of a genetic trait.

Codominance

Effect in which the full and separate phenotypic effects of two alleles are apparent in heterozygous individuals.