Mathematics, 10.01.2021 21:50, MarbleMonkey7907
A European growth mutual fund specializes in stocks from the British Isles, continental Europe, and Scandinavia. The fund has over 300 stocks. Let x be a random variable that represents the monthly percentage return for this fund. Suppose x has mean = 1.5% and standard deviation = 1.3%.
A button hyperlink to the SALT program that reads: Use SALT.
(a) Let's consider the monthly return of the stocks in the fund to be a sample from the population of monthly returns of all European stocks. Is it reasonable to assume that x (the average monthly return on the 300 stocks in the fund) has a distribution that is approximately normal? Explain.
Correct: Your answer is correct. , x is a mean of a sample of n = 300 stocks. By the Correct: Your answer is correct. , the x distribution
Correct: Your answer is correct. approximately normal.
(b) After 9 months, what is the probability that the average monthly percentage return x will be between 1% and 2%? (Round your answer to four decimal places.)
Correct: Your answer is correct.
(c) After 18 months, what is the probability that the average monthly percentage return x will be between 1% and 2%? (Round your answer to four decimal places.)
Correct: Your answer is correct.
(d) Compare your answers to parts (b) and (c). Did the probability increase as n (number of months) increased? Why would this happen?
Yes, probability increases as the standard deviation increases. Yes, probability increases as the mean increases. Yes, probability increases as the standard deviation decreases. No, the probability stayed the same. Correct: Your answer is correct.
(e) If after 18 months the average monthly percentage return x is more than 2%, would that tend to shake your confidence in the statement that = 1.5%? If this happened, do you think the European stock market might be heating up? (Round your answer to four decimal places.)
P(x > 2%) = Incorrect: Your answer is incorrect.
Answers: 1
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