Andrew plans to retire in 40 years. He plans to invest part of his retirement funds in stocks, so he seeks out info on past returns. Over the 20th century the real annual return on U.S common stocks had mean 8.7% and standard deviation 20.2%. The distribution of annual returns on common stocks is roughly symmetrical, so the mean return over an even moderate number of years is close to

MATLAB: An Introduction with Applications
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Andrew plans to retire in 40 years. He plans to
invest part of his retirement funds in stocks, so
he seeks out info on past returns. Over the
20th century the real annual return on U.S
common stocks had mean 8.7% and standard
deviation 20.2%. The distribution of annual
returns on common stocks is roughly
symmetrical, so the mean return over an even
moderate number of years is close to
normal.What is the probability that the mean
annual return on common stocks over the
next 40 years will exceed 10%?
Transcribed Image Text:Andrew plans to retire in 40 years. He plans to invest part of his retirement funds in stocks, so he seeks out info on past returns. Over the 20th century the real annual return on U.S common stocks had mean 8.7% and standard deviation 20.2%. The distribution of annual returns on common stocks is roughly symmetrical, so the mean return over an even moderate number of years is close to normal.What is the probability that the mean annual return on common stocks over the next 40 years will exceed 10%?
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