If the Returns on a Stock Index Can Be Characterized

question 40

Multiple Choice

If the returns on a stock index can be characterized by a normal distribution with mean 12%, the probability that returns will be lower than 12% over the next period equals ________.

• A) 50%
• B) 25%
• C) 46%
• D) 33%

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Definitions:

Statistical Process Control (SPC)

A method of quality control which employs statistical methods to monitor and control a process, helping to ensure that it operates at its fullest potential.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, calculated as the square root of the variance.

Process Control Limits

Boundaries in a control chart within which a process operates normally, and outside of which the process may need correction.

Specification Limits

Predetermined boundaries or limits within which a product, result, or characteristic must fall to be considered acceptable for its intended purpose.