In the last quarter of 2007, a group of 64 mutual funds had a mean return of 2.9

Question

In the last quarter of 2007, a group of 64 mutual funds had a mean return of 2.9% with a standard deviation of 7.3%. a normal model can be used to model them, what percent of the funds would you expect to be in each region? Use the 68-95-99.7 rule to approximate the probabilit rather than using technology to find the values more precisely Be sure to draw a picture first. ies a) Returns of 9.0% or less eturns of 2.9% hall Returns between 4,4% and 10.2% eturns of less 7% a) The expected percentage of returns that are 19.0% or less is b) The expected percentage of returns that are 29% or less is L% Type an integer or a d c) The expected percentage of returns that are between 4.4% and 10.2% is Type an integer or a decimal) d) The expected percentage of returns that are 11.7% or less is Type an integer or a decimal

Explanation / Answer

Answer to the question is as folllows:

There are no excel formulae as we have been asked to use the 68-95-99.7% rule to solve the problem.

a) Is 3 deviation less than 2.9% ( 2.9 - 3*7.3). So, .15%
This is calculated as ( 100- 99.7)/2

b) Mean is 2.9. So, less than that is half the distribuiton
So, P( return <= 2.9) = .5

c) The -4.4% to 10.2% is 2.9-/+ 7.3 ( or 1 deviation from mean)
So, 68% is the answer

d) -11.7% is 2 deviation from 2.9%. Which means that 2.5% is the answer
This is calc as (100-95)/2 = 2.5%

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