Question
Your financial advisor is offering two investment plans. The return on these investments is normally distributed. Plan A has medium risk, meaning that there is
Your financial advisor is offering two investment plans. The return on these investments is normally distributed. Plan A has medium risk, meaning that there is some risk of losing some or all of your money. This plan claims an average return of 3% on your investment with a standard deviation of 0.1%. Plan B has high risk, meaning that there is a stronger chance that you could lose a significant portion of your investment. The plan claims to have an average return of 5% with a standard deviation of 1%.
While investigating these plans, you discover that out of a random sample of 100 people who invested in Plan A, 78% of them received an average return of 2.75% with a standard deviation of 0.25%. Out of a random sample of 100 people who invested in Plan B, 88% of them experienced an average return of 3.9% with a standard deviation of 1.2%.
Discussion
Use what you know about the normal distribution, confidence intervals, or hypothesis testing to determine which of Plan A or Plan B, if either, you would choose to invest in. Include the mathematics you used to make your decision in your argument. Explain why you chose the metric you did (normal distribution, confidence interval, or hypothesis testing). Provide any the calculations to support your response. Use complete sentences and paragraphs, as needed, in your answer.
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