Question

The file CD Rate contains yields for a one-year certificate of deposit (CD) and a five-year CD for 39 banks listed for West Palm Beach, Florida on January 9, 2017. For each type of investment, decide whether the data appear to be approximately normally distributed by:

a. comparing data characteristics to theoretical properties.

b. constructing a normal probability plot

Bank	One-Year	Five-Year
5 Star Bank	1.00	1.60
Alostar Bank of Commerce	1.05	1.66
Amalgamated Bank	0.50	1.10
AmTrust Bank	0.40	1.25
Applied Bank	0.15	0.15
Armed Forces Bank N. A.	0.75	1.75
Auto Club Trust FSB	1.15	1.75
Bank of America	0.05	0.15
Blake & Herbert Bank	0.50	0.65
BlueHarbor Bank	0.50	0.90
BMO Harris Bank NA	0.15	0.75
Busey Bank	0.20	0.75
California First National Bank	1.26	1.80
CBC national Bank	0.45	1.75
Discover Bank	1.15	1.76
EH National Bank	0.95	1.51
E-Loan	1.28	1.80
EverBank	1.35	2.28
First Internet Bank of Indiana	1.21	2.07
First Tennessee Bank NA	0.10	0.55
Goildman Sachs Bank USA	1.20	1.85
Goldwater Bank	1.07	1.25
grantbank	1.06	1.66
Grow Financial FCU	0.45	2.00
Home Savings Bank	1.00	1.90
Live Oak Bank	1.30	1.75
Luana Savings Bank	0.80	1.61
Patriot Bank	0.30	1.01
Pendelton Community Bank	0.35	1.35
PNC Bank	0.10	0.55
Popular Direct	1.28	2.25
Presidential Bank FSB	0.95	1.53
Radius Bank	0.25	1.00
Synchrony	1.25	1.85
TD Bank NA	0.25	0.65
Union Bank	0.25	1.15
Urban Partnership Bank	0.28	0.70
VirtualBank	1.31	1.81
Wells Fargo	0.05	0.35

Answer 1

a) For One-year CD

     Mean = 0.7089744           Median = 0.75

     Mean is not same as the median, which is a property of the normal distribution.

     Hence, one year CD is not normally distributed.

    

     For Five-year CD

     Mean = 1.338462           Median = 1.53

     Mean is not same as the median, which is a property of the normal distribution.

     Hence, five year CD is not normally distributed.

b)

Normal Probability Plot for One year CD is given below

Since the points are not on a straight line, the One year CD is not Normally Distributed

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Normal Probability Plot for Five year CD is given below

Since the points are not on a straight line, the Five year CD is not Normally Distributed