Finance: Dean Witter Funds Dean Witter European Growth is a mutual fund that specializes in stocks from the British Isles, continental Europe, and Scandinavia. The fund has over 100 stocks. Let x be a random variable that represents the monthly percentage return for this fund. Based on information from Morningstar (see 17), x has mean m 1.4% and standard deviation s 0.8%. (a) Lets consider the monthly return of the stocks in the Dean Witter fund to be a sample from the population of monthly returns of all European stocks. Is it reasonable to assume that x (the average monthly return on the 100 stocks in the Dean Witter European Growth fund) has a distribution that is approximately normal? Explain. Hint: See 17, part (a). (b) After 9 months, what is the probability that the average monthly percentage return will be between 1% and 2%? Hint: See Theorem 7.1 and the results of part (a). (c) After 18 months, what is the probability that the average monthly percentage return will be between 1% and 2%? (d) Compare your answers to parts (b) and (c). Did the probability increase as n (number of months) increased? Why would this happen? (e) Interpretation: If after 18 months the average monthly percentage return is more than 2%, would that tend to shake your confidence in the statement that m 1.4%? If this happened, do you think the European stock market might be heating up? Explain.
STAT 110: Notes for Week of 11/1/16 Chapter 14 o This chapter will deal with bivariate data: data that has two variables in it. o Bivariate data can be comprised of two quantitative variables, a categorical and a quantitative variable, or two categorical variables. o Scatterplot: a graph that shows the correlation between two quantitative variables. o In a scatterplot, there is usually one explanatory variable (plotted on the x axis) and one response variable (plotted on the y axis) – but not always. A scatterplot can be graphed as long as there are two quantitative variables. o Look for the overall pattern in a scatterplot; this is defined by the direction