Based on the following information, calculate the geometric average return, arithmetic average return, variance, and standard deviation for the stock. Year Return 1 10% 2 -5% 3 15% 4 20% Draw and label a graph of a normal distribution using the mean and standard deviation. How many observations are typically required to approach a normal distribution? Compare and contrast the geometric and arithmetic average returns.
Inverse Normal Distribution
The method used for finding the corresponding z-critical value in a normal distribution using the known probability is said to be an inverse normal distribution. The inverse normal distribution is a continuous probability distribution with a family of two parameters.
Mean, Median, Mode
It is a descriptive summary of a data set. It can be defined by using some of the measures. The central tendencies do not provide information regarding individual data from the dataset. However, they give a summary of the data set. The central tendency or measure of central tendency is a central or typical value for a probability distribution.
Z-Scores
A z-score is a unit of measurement used in statistics to describe the position of a raw score in terms of its distance from the mean, measured with reference to standard deviation from the mean. Z-scores are useful in statistics because they allow comparison between two scores that belong to different normal distributions.
- Based on the following information, calculate the geometric average return, arithmetic average return, variance, and standard deviation for the stock.
|
Year |
Return |
|
1 |
10% |
|
2 |
-5% |
|
3 |
15% |
|
4 |
20% |
Draw and label a graph of a
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