Imagine that you have a portfolio of stocks. You want to compare the performance of your stocks to the market as a whole. You learn that the population mean,μ, of stock returns is 7%, and that the population standard deviation, σ, is 2%.
i) Imagine that you have a portfolio of 10 stocks, that have a sample mean of 14%. Construct a 90% confidence interval.
ii) What is the probability that the sample mean is equal to the population mean?