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 375 stocks in the fund) has a distribution that is approximately normal? Explain. Select-v, x is a mean of a sample ofn = 375 stocks. By the -Select- the x distribution Select-v 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.) (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.)

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A European growth mutual fund specializes in stocks from the British Isles, continental Europe, and Scandinavia. The fund has over 375 stocks. Let x be a random variable that represents
the monthly percentage return for this fund. Suppose x has mean u = 1.2% and standard deviation o = 0.7%.
(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 375 stocks in the fund) has a distribution that is approximately normal? Explain.
Select-v, x is a mean of a sample of n = 375 stocks. By the
v the x distribution -Select- approximately normal.
-Select-
(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.)
(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.)
(d) Compare your answers to parts (b) and (c). Did the probability increase as n (number of months) increased? Why would this happen?
O Yes, probability increases as the mean increases.
O Yes, probability increases as the standard deviation decreases.
O Yes, probability increases as the standard deviation increases.
O No, the probability stayed the same.
(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 u = 1.2%? If this happened, do
you think the European stock market might be heating up? (Round your answer to four decimal places.)
P(x > 2%) =
Explain.
O This is very likely if u = 1.2%. One would suspect that the European stock market may be heating up.
O This is very unlikely if u = 1.2%. One would not suspect that the European stock market may be heating up.
O This is very likely if u = 1.2%. One would not suspect that the European stock market may be heating up.
Us O 9 I 12:44
hp
%
Transcribed Image Text:A European growth mutual fund specializes in stocks from the British Isles, continental Europe, and Scandinavia. The fund has over 375 stocks. Let x be a random variable that represents the monthly percentage return for this fund. Suppose x has mean u = 1.2% and standard deviation o = 0.7%. (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 375 stocks in the fund) has a distribution that is approximately normal? Explain. Select-v, x is a mean of a sample of n = 375 stocks. By the v the x distribution -Select- approximately normal. -Select- (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.) (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.) (d) Compare your answers to parts (b) and (c). Did the probability increase as n (number of months) increased? Why would this happen? O Yes, probability increases as the mean increases. O Yes, probability increases as the standard deviation decreases. O Yes, probability increases as the standard deviation increases. O No, the probability stayed the same. (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 u = 1.2%? If this happened, do you think the European stock market might be heating up? (Round your answer to four decimal places.) P(x > 2%) = Explain. O This is very likely if u = 1.2%. One would suspect that the European stock market may be heating up. O This is very unlikely if u = 1.2%. One would not suspect that the European stock market may be heating up. O This is very likely if u = 1.2%. One would not suspect that the European stock market may be heating up. Us O 9 I 12:44 hp %
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