TABLE 6-4 According to Investment Digest, the Arithmetic Mean of the Annual

question 132

Short Answer

TABLE 6-4
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 6-4, find the probability that the annual return of a random year will be more than 11.5%.

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Definitions:

Consumer Behavior

The study of individuals, groups, or organizations and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society.

Fairness

A concept that deals with equitable treatment and the distribution of resources in a just manner.

Anchoring

A cognitive bias that describes the common human tendency to rely too heavily on the first piece of information offered when making decisions.

Context

Context refers to the circumstances or conditions that surround a particular event, decision, or phenomenon, affecting its meaning or interpretation.