(12-13) The following table is the result of the data analysis of stocks. the mo
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Question
(12-13) The following table is the result of the data analysis of stocks. the monthly return rates of four Monthly Return(%) Fund A ps) Find 0.611 0.8 04 Mar -01 0.6 0.4 0.6 0.4 0.5 -0.4 0.4 1.1 0.7 -04 -06 Jul 0.8 0.8 0.3 1.6 Oct Nov Dec 0.1 -04 012 Mean Standard Error Mediar Mode 0.325 016666667 0.1 0.1414883 01845388 0 16275718 0. 0.4900 0.35 0.15 035 0.6 1.9 Standard Deviation 049012985 056622086 0.5638074 169759183 Sample Variance024022727 032D60606 031787879 2.83181818 -10676555 -14351482 -1 2527153 -20104934 st. st 014141021 019176657 009197 -018932 4.1 2 2.1 12 15 1.7 04 0.6 0.6 Minimum Maximurn Surn 1.1 3.9 12 Count 12 12. Assuming a bell-shaped normal distribution of return rates for Fund A, we would expect APPROXIMATELY 99.7% of the monthly return rates for Fund A to be in which of the following interval? (a) (-0.065, 0.615) (c) (-1.145, 1.795) (b) (-0.094, 0.744) (d) (-1.635, 2.285) 13. Which of these stocks carries the most risk with respect to monthly returns? (e) Fund A Fund B (e) Fund und DExplanation / Answer
Solution
Confidence interval can be calculated as follwos:
mean +/- zalpha/2* SD/sqrt(n)
0.325 +/- 2.96*0.49012/sqrt(11)
0.325 +/- 2.96*0.1414
0.325 + 2.96*0.1414 to 0.325 - 2.96*0.1414
0.325 + 0.418544 to 0.325 - 0.418544
-0.0935 to 0.743544
So its answer is B.i.e. (-0.094,0.744)
Solution(13)
Coefficient varaition(A) = 0.49012/0.325 = 1.5080 or 150.80%
Coeficient variation(B) = 0.56622/0.1666= 3.3986 or 339.86%
Coeficient variation(C) = 0.5638/0.21666 = 2.6029 or 260.29%
Coeficient Variation(D) = 1.6975/0.1 = 16.975 or 1697.5%
from the Coefficient variation we found that Project D is much risky than other projects as Coefficient Variation is Higher than other projects. So its answer is D.
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