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#20 Finance: European Growth Fund A European growth mutual fund specializes in stock from British Isles, continental Europe, and Scandinavia. The fund has over 100 stocks. Let x be a random variable that represents the monthly percentage return for this fund. Based on information from Morningstar, x has a mean u = 1.4% and standard deviation o = 0.8%. (a) Let's consider the monthly return of the stocks in the European growth 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 100 stocks n the European fund) has a distribution that is approximately normal. (b) After 9 months, what is the probability that the average monthly percentage return I will be between 1% to 2%. (c) After 18 months, what is the probability that the average monthly percentage return x will be between 1% to 2%. (d) Compare your answers to parts (b) and (c). Did the probability increase as n (number of months) increase? Why would this happen? (e) If after 18 months the average monthly percentage return ī is more than 2%, would that tend to shake your confidence in the statement that u = 1.4%? If this happened, do you think the European stock market might be heating up? Explain.

#20 Finance: European Growth Fund A European growth mutual fund specializes in stock from British Isles, continental Europe, and Scandinavia. The fund has over 100 stocks. Let x be a random variable that represents the monthly percentage return for this fund. Based on information from Morningstar, x has a mean u = 1.4% and standard deviation o = 0.8%. (a) Let's consider the monthly return of the stocks in the European growth 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 100 stocks n the European fund) has a distribution that is approximately normal. (b) After 9 months, what is the probability that the average monthly percentage return I will be between 1% to 2%. (c) After 18 months, what is the probability that the average monthly percentage return x will be between 1% to 2%. (d) Compare your answers to parts (b) and (c). Did the probability increase as n (number of months) increase? Why would this happen? (e) If after 18 months the average monthly percentage return ī is more than 2%, would that tend to shake your confidence in the statement that u = 1.4%? If this happened, do you think the European stock market might be heating up? Explain.

Linear Algebra: A Modern Introduction
Linear Algebra: A Modern Introduction
4th Edition
ISBN:9781285463247
Author:David Poole
Publisher:David Poole
Chapter3: Matrices
Section3.7: Applications
Problem 44EQ
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please answer especially D and E ! thank you

#20 Finance: European Growth Fund A European growth mutual fund specializes in stock from British Isles, continental Europe, and Scandinavia. The fund has over 100 stocks. Let x be a random variable that represents the monthly percentage return for this fund. Based on information from Morningstar, x has a mean u = 1.4% and standard deviation o = 0.8%. (a) Let's consider the monthly return of the stocks in the European growth 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 100 stocks n the European fund) has a distribution that is approximately normal. (b) After 9 months, what is the probability that the average monthly percentage return X will be between 1% to 2%. (c) After 18 months, what is the probability that the average monthly percentage return x will be between 1% to 2%. (d) Compare your answers to parts (b) and (c). Did the probability increase as n (number of months) increase? Why would this happen? (e) If after 18 months the average monthly percentage return i is more than 2%, would that tend to shake your confidence in the statement that u = 1.4%? If this happened, do you think the European stock market might be heating up? Explain.
Transcribed Image Text:#20 Finance: European Growth Fund A European growth mutual fund specializes in stock from British Isles, continental Europe, and Scandinavia. The fund has over 100 stocks. Let x be a random variable that represents the monthly percentage return for this fund. Based on information from Morningstar, x has a mean u = 1.4% and standard deviation o = 0.8%. (a) Let's consider the monthly return of the stocks in the European growth 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 100 stocks n the European fund) has a distribution that is approximately normal. (b) After 9 months, what is the probability that the average monthly percentage return X will be between 1% to 2%. (c) After 18 months, what is the probability that the average monthly percentage return x will be between 1% to 2%. (d) Compare your answers to parts (b) and (c). Did the probability increase as n (number of months) increase? Why would this happen? (e) If after 18 months the average monthly percentage return i is more than 2%, would that tend to shake your confidence in the statement that u = 1.4%? If this happened, do you think the European stock market might be heating up? Explain.
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