Annual returns on the more than 5000 common stocks available to investors varya lot. In
Chapter 0, Problem 11.19(choose chapter or problem)
Annual returns on the more than 5000 common stocks available to investors varya lot. In a recent year, the mean return was 8.3% and the standard deviation ofreturns was 28.5%. The law of large numbers says that(a) you can get an average return higher than the mean 8.3% by investing in alarge number of stocks.(b) as you invest in more and more stocks chosen at random, your average returnon these stocks gets ever closer to 8.3%.(c) if you invest in a large number of stocks chosen at random, your averagereturn will have approximately a Normal distribution.
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