elearning.utdallas.edu Clicker question 19 Suppose you invest $10,000 in a finan

Question

elearning.utdallas.edu Clicker question 19 Suppose you invest $10,000 in a financial portfolio that generates a weekly income from a normal distribution with mean $100 and standard deviation $50. If you leave your principle (the initial investment of $10,000) for a year (about 52 weeks), what is your expected earning and its standard error? a. expected earning = 52, standard error 52 b- expected earning = 100, standard error = 50 c. expected earning = 5200, standard error = 2600 d, expected earning = 10.000, standard error = 10.000

Explanation / Answer

The weekly returns can be viewed as i.i.d. and as such there are 52 random variables. And hence, sum of the means of the random variables will give us the required answer for mean.And hence, answer for mean would be 52*100.

Answer for standard error seems to be wrong to me. As standard error should sqrt(52)*50 .But answer is 2600.

I would go with c option. Thanks,

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