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  3. 3 a stock index consists of the market value of...

Question: 3 a stock index consists of the market value of...

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3. A stock index consists of the market value of a collection of stocks. The rate of return on stock of 1900-1999, the Standard & ollows an approximately normal distribution. In th oors 500 index, abbreviated S & P 500, bes produced ar average annual return of approximately with a standard deviation of about 18% (a) In what range do the middle 50% of allstocks yearly returns lie? (As with other problems, it may help to araw a picture.) Answer: (-0.641%,23.641%) (b) The stock market is said to be doun on any year if the return on the S & P 500 is below zero. In what percent of years is the market down? Answer: 26.649% (c) Investors have a lot to cheer about if in any one year S & P 500 index returns in excess of 20%. In what percent of years does the index gain over 20%? Answer: 31.838% (5517)
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