According to Investment Digest, the arithmetic mean of the annual return for common stocks over an85-year period was 9.5% but the value of the variance was not mentioned. Also 25% of the annualreturns were below 8% while 65% of the annual returns were between 8% and 11.5%. The articleclaimed that the distribution of annual return for common stocks was bell-shaped and approximatelysymmetric. Assume that this distribution is normal with the mean given above.

find the probability that the annual return of a random year will beless than 11.5%.

Question 4Answer

a.

90%

b.

95%

c.

50%

d.

10%

e.

70%