According to investment digest diversification and the


Question 1. According to Investment Digest ("Diversification and the Risk/Reward Relationship", Winter 1994, 1-3), the mean of the annual return for common stocks from 1926 to 1992 was 16.5%, and the standard deviation of the annual return was 19%.

In later parts of the question we will ask:

For this part, answer the following question:

What is the area between the mean and actual score?

A=.408 B=.039

A=.307 B=.031

A=.408 B=.319

A=.308 B=.039

Question 2.

a. What is the probability that the stock returns are greater than 0%?

b. What is the probability that the stock returns are less than 18%?

P>0=80.7; P<18=53.1

P>0=86.7; P<18=53.2

P>0=19.2; P<18=46.8

P>0=29.7; P<18=53.2

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