Question

A financial analyst is thinking of changing the composition of her stock market portfolio. Last year, the mean return of the stocks in the portfolio was 10 with a standard deviation of 2. Returns of stocks are normally distributed. A random sample of 9 stocks are chosen from the portfolio. What is the probability that the mean return on the portfolio is less than 11?

A. 0.3318

B. 0.4515

C. 0.9332

D. 0.0228

A financial analyst is thinking of changing the composition of her stock market portfolio. Last year, the mean return of the stocks in the portfolio was 10 with a standard deviation of 2. Returns of stocks are normally distributed. A random sample of 9 stocks are chosen from the portfolio.

What is the probability that the mean return on the portfolio is more than 11?   

		0.0668
		0.3318
		0.4515
		0.9332

Answer 1

Solution :

Given that ,

mean = = 10

standard deviation = = 2

n = 9

= = 10  

= / n = 2/ 9 = 0.6667

P( < 11 ) = P(( - ) / < (11 - 10) /0.6667 )

= P(z < 1.50)

= 0.9332

probability = 0.9332

Answer = C. 0.9332

P( > ) = 1 - P( < )

= 1 - P[( - ) / < (11-10) /0.6667 ]

= 1 - P(z <1.50)

= 1 - 0.9332 = 0.0668

Probability = 0.0668

Answer = 0.0668