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st need help with (d) and (e)

MATLAB: An Introduction with Applications
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)
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 hp 女
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 hp 女
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