The Wall Street Journal reported that long term Treasury bonds had a mean return

Question

The Wall Street Journal reported that long term Treasury bonds had a mean return of 24.03% in 2008. Assume that the returns for the long term Treasury bonds were distributed as a normal random variable, with a mean of 24.03 and a standard deviation of 10.

If you select a random sample of 4 Treasure bonds from this population, what is the probability that the sample would have a mean return of...

d. less than 0 (a loss)?

e. between 10 and 20 ?

f. greater than 10 ?

g. Compare your results in parts (d) through (f) to those in parts (a) through (c)

Explanation / Answer

for std error of mean =std deviation/(n)1/2 =5

d)P(X<0)=P(Z<(0-24.03)/5)=P(Z<-4.806)=0.0000

e)P(10<X<20)=P(-2.806<-0.806)=0.2101-0.0025=0.2076

f)P(X>10)=1-P(Z<-0.2806)=1-0.0025=0.9975

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.