The Sample Mean and the Sample Standard Deviation of Annual

question 115

Essay

The sample mean and the sample standard deviation of annual returns on a stock over a 12-year period as computed by a stock analyst were 18% and 12%, respectively. The analyst wants to know if the risk, as measured by the standard deviation, differs from 15%.
A) Construct a 90% confidence interval of the population variance and the population standard deviation.
B) What assumption is required in constructing the confidence interval?
C) Based on the above confidence interval, does the risk differ from 15%?

• A) Construct a 90% confidence interval of the population variance and the population standard deviation.
• B) What assumption is required in constructing the confidence interval?
• C) Based on the above confidence interval, does the risk differ from 15%?

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Definitions:

Diabetes

A chronic condition characterized by high blood sugar levels due to the body's inability to produce enough insulin or effectively use the insulin it makes.

Hyperglycemia

A condition characterized by an excessively high level of glucose (sugar) in the blood.

Glucose Levels

The concentration of glucose, a type of sugar, in the blood, which is crucial for energy production in the body.

Psychological Reactivity

A person's emotional or psychological response to external stimuli or situations.