Mathematics, 07.04.2020 18:32, jaimejohnston2

Annual returns on common small stocks available to investors vary a lot. In a recent year, the mean return was 11.7% and the standard deviation of returns was 34.1%. The law of large numbers says that

a. if you invest in a large number of stocks chosen at random, your average return will have approximately a Normal distribution.

b. as you invest in more and more stocks chosen at random, your average return on these stocks gets ever closer to 11.7%.

c. you can get an average return higher than the mean 11.7% by investing in a large number of stocks.

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Annual returns on common small stocks available to investors vary a lot. In a recent year, the mean...