Question

In: Statistics and Probability

A certain stock market had a mean return of 2.6% in a recent year. Assume that...

A certain stock market had a mean return of 2.6% in a recent year. Assume that the returns for stocks on the market were distributed normally, with a mean of 2.6 and a standard deviation of 10. Complete parts (a) through (g) below.

a. If you select an individual stock from this population, what is the probability that it would have a return less than 0 (that is, a loss)?

The probability is (Round to four decimal places)

b. If you select an individual stock from this population, what is the probability that it would have a return between -11 and -19?

The probability is (Round to four decimal places)

c. If you select an individual stock from this population, what is the probability that it would have a return greater than -7?

The probability is (Round to four decimal places)

d. If you select a random sample of four stocks from this population, what is the probability that the sample would have a mean return less than 0 (a loss)?

e. If you select a random sample of four stocks from this population, what is the probability that the sample would have a mean return between -11 and -19?

The probability is (Round to four decimal places)

Solutions

Expert Solution

Let X denotes the return from a randomly selected stock.

X ~ Normal(2.6, 102)

a)  If you select an individual stock from this population, the probability that it would have a return less than 0 (that is, a loss)

b) The probability that it would have a return between -11 and -19

c) If you select an individual stock from this population, the probability that it would have a return greater than -7 is

d) Let denotes the mean return for a random sample of four stocks from this population.

or

Now,

The probability that the sample would have a mean return less than 0 (a loss)

e) The probability that the sample would have a mean return between -11 and -19

orchestra answered 1 year ago
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