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

question 54

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

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Value Analysis

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