Question

Consider three stock funds, which we will call Stock Funds 1, 2, and 3. Suppose that Stock Fund 1 has a mean yearly return of 20.80 percent with a standard deviation of 11.20 percent; Stock Fund 2 has a mean yearly return of 14.80 percent with a standard deviation of 2.30 percent, and Stock Fund 3 has a mean yearly return of 5.20 percent with a standard deviation of 7.60 percent. (a) For each fund, find an interval in which you would expect 95.44 percent of all yearly returns to fall. Assume returns are normally distributed. (Round your answers to 2 decimal places. Negative amounts should be indicated by a minus sign.) (b) Using the intervals you computed in part a, compare the three funds with respect to average yearly returns and with respect to variability of returns. (c) Calculate the coefficient of variation for each fund, and use your results to compare the funds with respect to risk. Which fund is riskiest? (Round your answers to 2 decimal places.)

          Consider three stock funds, which we will call Stock Funds 1, 2,
and 3. Suppose that Stock Fund 1 has a mean yearly return of 20.80
percent with a standard deviation of 11.20 percent; Stock Fund 2
has a mean yearly return of 14.80 percent with a standard deviation
of 2.30 percent, and Stock Fund 3 has a mean yearly return of 5.20
percent with a standard deviation of 7.60 percent.
(a) For each fund, find an interval in
which you would expect 95.44 percent of all yearly returns to fall.
Assume returns are normally distributed. (Round your
answers to 2 decimal places. Negative amounts should be indicated
by a minus sign.)
(b) Using the intervals you computed in
part a, compare the three funds with respect to
average yearly returns and with respect to variability of
returns.
(c) Calculate the coefficient of variation
for each fund, and use your results to compare the funds with
respect to risk. Which fund is riskiest? (Round your
answers to 2 decimal places.)

Show more…

Added by Ashley S.

Elementary Statistics a Step by Step Approach

Allan G. Bluman 9th Edition

Instant Answer

Solved by Expert David Nguyen

10/05/2022

Step 1

44 percent interval for Stock Fund 1: The interval will be mean plus or minus 2 times the standard deviation. Lower bound: \(20.80 - 2 \times 11.20 = -1.60\) Upper bound: \(20.80 + 2 \times 11.20 = 43.20\) Show more…

Show all steps

lock

Thanks for your feedback!

Consider three stock funds, which we will call Stock Funds 1, 2, and 3. Suppose that Stock Fund 1 has a mean yearly return of 20.80 percent with a standard deviation of 11.20 percent; Stock Fund 2 has a mean yearly return of 14.80 percent with a standard deviation of 2.30 percent, and Stock Fund 3 has a mean yearly return of 5.20 percent with a standard deviation of 7.60 percent. (a) For each fund, find an interval in which you would expect 95.44 percent of all yearly returns to fall. Assume returns are normally distributed. (Round your answers to 2 decimal places. Negative amounts should be indicated by a minus sign.) (b) Using the intervals you computed in part a, compare the three funds with respect to average yearly returns and with respect to variability of returns. (c) Calculate the coefficient of variation for each fund, and use your results to compare the funds with respect to risk. Which fund is riskiest? (Round your answers to 2 decimal places.)

Play audio

Feedback

Powered by NumerAI

David Nguyen and 94 other subject Intro Stats / AP Statistics educators are ready to help you.

Ask a new question

Labs

Want to see this concept in action?

NEW

Explore this concept interactively to see how it behaves as you change inputs.

View Labs

Key Concepts

Recommended Videos

Recommended Textbooks

Transcript

00:01 Hi, i'm david and i'm here to have you and see your question.

00:03 Now let me bring up your question here.

00:09 In the question here we have the stock fund 1, 2 and 3 and for each of them they are given the minimum standard division.

00:18 So i will call the s1, the stock fund 1.

00:22 It has the m1, it will equal to the 20 point 0 and the standard deviation.

00:32 It will equal to the 11 .2 and we have the s2.

00:39 We will have the mew 2 and we do it down here.

00:43 So s2 it will have the mean it will equal to the 14 .8 and the standard division doesn't be the 2 it will equal to the 2 .3 and the s3 we are given that the mew 3, it will equal to the 5 .2, the sigma 3, it will equal to the 7 .6.

01:15 Now in the first question i asked you to find the 99 .44 interval.

01:22 And remember that for the 195 .44 interval, it will equal to the mean plus and minus 2 standard deviation.

01:36 Now it will apply this formula here and then we will have this one we have this will be the 95 .44 percent interval.

01:53 For the stock one we will take the 20 point 80 plus and minus 2 times the 11 .2 and then it will use the minus 20 .8 minus 2 times 11 .2 can equal to the minus 1 .2 and then we use the plus 2 times 11 .2 we get equal to the 43 .2.

02:18 For the stock 2 we will have the 14 .8 plus or minus 2 times under 2 .3 and then we have 14 .8 minus 2 times 2 .3 equal to the 10 .2, 14 .8 plus 2 times the 2 .3 equal to the 10 .2 14 .8 plus 2 times the 2 .3 equal to the 19.

02:40 Point four and for the stock three we have the 5 .2 plus a minus 2 times 7 .6 5 .2 times 2 plus 2 times 7 .6 equal to the 20 .4 sorry i make a mistake here 5 .2 minus 2 times 7 .6 then it get equal to the minus 2 times 7 .6 then it gets equal to the 10 and 5 .2 plus 2 times 7 .6 equal to the 20 .4...

Ace is your personal tutor. It breaks down any question with clear steps so you can learn.

Start Using Ace

Continue solving this problem

Create a free account to:

View full step-by-step solution
Ask follow-up questions with Ace AI
Save progress and study later