ECON 221 Lecture Notes - Lecture 12: Standard Deviation, Random Variable, Standard Normal Deviate
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Suppose a certain mutual fund has an annual rate of return that is approximately normally distributed with mean 10 percent and standard deviation 4 percent. | |||||||||
33 | The probability that the 1-year return will be negative is ______. | ||||||||
a | 0.0170 | ||||||||
b | 0.0116 | ||||||||
c | 0.0062 | ||||||||
d | 0.0044 | ||||||||
34 | The probability that the 1-year return will exceed 15 percent is ______. | ||||||||
a | 0.1056 | ||||||||
b | 0.1357 | ||||||||
c | 0.8643 | ||||||||
d | 0.8944 | ||||||||
35 | What fraction of returns fall within ±6 percentage points from the mean return? | ||||||||
a | 0.7819 | ||||||||
b | 0.8231 | ||||||||
c | 0.8664 | ||||||||
d | 0.9010 | ||||||||
36 | What middle interval includes 95% of all annual rates of return? | ||||||||
a | 2.16 | 17.84 | |||||||
b | 3.42 | 16.58 | |||||||
c | 4.24 | 15.76 | |||||||
d | 5.30 | 14.70 | |||||||
Consider a population of five families with the following data representing the number of pets in each family.
Family |
Number of Pets |
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A |
2 |
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B |
6 |
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C |
4 |
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D |
3 |
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E |
1 |
How many possible samples of size 2 can be drawn?
Write each of the possible samples and then determine the mean of each sample.
Determine the mean and the standard deviation of the population.
For the distribution of sample mean values, provide the mean and the standard error of the mean.
Question 1: Which of the following best describes the geometric mean?
1. It is the arithmetic mean with certain lower and upper percentages of the data points being removed.
2. It is the middle value of the data set.
3. It measures the average rate of change.
4. It is the balancing point.
Question 2: Below are investment returns from three stocks:
Stock A: 13%,23%,42%,52% (mean = 32.5% and standard deviation = 17.71%)
Stock B: 10%,30%,50%,70% (mean = 40% and standard deviation = 25.82%)
Stock C: 45%, 74%, 83%, 90% (mean = 73% and standard deviation = 19.78%)
Which stock has the lowest absolute risk?
Which stock should a risk-seeking investor invest in?
Two correct answers.
1. |
Stock A has the lowest absolute risk. |
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2. |
Stock B has the lowest absolute risk. |
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3. |
Stock C has the lowest absolute risk. |
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4. |
A risk-seeking investor should invest in Stock A. |
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5. |
A risk-seeking investor should invest in Stock B. |
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6. |
A risk-seeking investor should invest in Stock C. |