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

question 53

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, 10% of the annual returns will be less than what amount?

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Definitions:

Power Distance

The extent to which an unequal distribution of power is accepted by society members.

Motivation Theory

A concept in psychology that explains what drives individuals to initiate, direct, and persist in behaviors or actions.

Collective Cultures

Societies or groups where individuals prioritize the good of the community over personal achievements or desires.

Reward Allocation

The distribution of financial or non-financial incentives among organizational members based on certain criteria or achievements.