st need help with (d) and (e)
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
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I just need help with (d) and (e)

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 meanu = 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.
Yes
VV ,x is a mean of a sample of n = 375 stocks. By the central limit theorem v
the x distribution is
vv 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.)
0.804
(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.)
0.8873
(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 • O 2:23
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