Chapter 4.3, Problem 120E

To determine

To explain how this difference could happen.

Explanation of Solution

When the mean is much higher than the median that this means that there are a few very unusually high changes in the stock prices (values above $111\%$ ), while most of the changes in the stock prices are negative (below zero percent).

Thus in other words, the distribution of the change in stock prices would be strongly skewed to the right. The mean will then be strongly influenced by the few unusually high stock price changes (the strong skewness), while the median is mostly unaffected by these few unusually high stock price changes and this then causes the mean to be much higher than the median.