Financial Stocks 18.93 5.38 21.00 7.91 40.48 15.37 43.42 15.83 27.05 15.23 48.12
ID: 3432403 • Letter: F
Question
Financial Stocks
18.93
5.38
21.00
7.91
40.48
15.37
43.42
15.83
27.05
15.23
48.12
11.91
43.37
14.65
46.32
9.76
24.01
19.24
29.23
7.94
Energy Stocks
21.03
26.14
11.25
16.75
21.74
20.31
23.82
23.51
12.46
21.16
21.46
26.65
10.27
20.82
26.58
13.91
26.62
24.39
19.07
19.07
Stocks can be categorized by industry. The following data represent the 5-year rates of return for a simple random sample of financial stocks and energy stocks.
Compute the mean and median rate of return for each industry. Which sector has the higher mean rate of return? Which sector has the higher median rate of return?
Sample mean for financial stocks =
Sample mean for energy stocks =
Median for financial stocks =
Median for energy stocks =
Which sector has the higher mean rate of return?
The energy or financial stocks have the higher mean rate of return
Which sector has the higher median rate of return?
The energy or financial stock has the higher median rate of return
Compute the standard deviation for each industry. In finance, the standard deviation rate of return is called risk. Which sector is riskier?
Sample standard deviation for financial stocks =
Sample standard deviation for energy stocks =
Which of the stocks are riskier financial or energy?
Financial Stocks
18.93
5.38
21.00
7.91
40.48
15.37
43.42
15.83
27.05
15.23
48.12
11.91
43.37
14.65
46.32
9.76
24.01
19.24
29.23
7.94
Energy Stocks
21.03
26.14
11.25
16.75
21.74
20.31
23.82
23.51
12.46
21.16
21.46
26.65
10.27
20.82
26.58
13.91
26.62
24.39
19.07
19.07
Explanation / Answer
Stocks can be categorized by industry. The following data represent the 5-year rates of return for a simple random sample of financial stocks and energy stocks.
Compute the mean and median rate of return for each industry. Which sector has the higher mean rate of return? Which sector has the higher median rate of return?
financial
(x-mean)
(x-mean)^2
energy
(x-mean)
(x-mean)^2
5.38
-17.8775
319.6050063
10.27
-10.0805
101.6164803
7.91
-15.3475
235.5457563
11.25
-9.1005
82.81910025
7.94
-15.3175
234.6258063
12.46
-7.8905
62.25999025
9.76
-13.4975
182.1825063
13.91
-6.4405
41.48004025
11.91
-11.3475
128.7657563
16.75
-3.6005
12.96360025
14.65
-8.6075
74.08905625
19.07
-1.2805
1.63968025
15.23
-8.0275
64.44075625
19.07
-1.2805
1.63968025
15.37
-7.8875
62.21265625
20.31
-0.0405
0.00164025
15.83
-7.4275
55.16775625
20.82
0.4695
0.22043025
18.93
-4.3275
18.72725625
21.03
0.6795
0.46172025
19.24
-4.0175
16.14030625
21.16
0.8095
0.65529025
21
-2.2575
5.09630625
21.46
1.1095
1.23099025
24.01
0.7525
0.56625625
21.74
1.3895
1.93071025
27.05
3.7925
14.38305625
23.51
3.1595
9.98244025
29.23
5.9725
35.67075625
23.82
3.4695
12.03743025
40.48
17.2225
296.6145063
24.39
4.0395
16.31756025
43.37
20.1125
404.5126563
26.14
5.7895
33.51831025
43.42
20.1625
406.5264063
26.58
6.2295
38.80667025
46.32
23.0625
531.8789063
26.62
6.2695
39.30663025
48.12
24.8625
618.1439063
26.65
6.2995
39.68370025
sum:
465.15
3704.895375
407.01
498.572095
To find these values, set up a table sorted lowest to highest. Have a column for financial and a column for energy. Then for each, make a new column where you subtract the mean from them, and finally a column for squaring those values. Then using the last row, the totals, and the sample size of 20, you can compute as follows:
Sample mean for financial stocks = 465.15/20 = 23.2575
Sample mean for energy stocks =407.01/20 = 20.3505
The median is the middle value. Since the sample size is 20, an even number, it will be the average of the two middle numbers
Median for financial stocks = (18.93 + 19.24)/2 = 19.085
Median for energy stocks = (21.03 + 21.16)/2 = 21.095
Which sector has the higher mean rate of return?
The financial stocks have the higher mean rate of return. (23.2575 is greater than 20.3505)
Which sector has the higher median rate of return?
The energy stock has the higher median rate of return (21.095 is greater than 19.085)
Compute the standard deviation for each industry. In finance, the standard deviation rate of return is called risk. Which sector is riskier?
To compute this, use the last row, the sums and the sample size of 20.
Sample standard deviation for financial stocks = square root of (3704.895375/(20-1)) = 13.964
Sample standard deviation for energy stocks = square root of (498.572095/(20-1)) = 5.123
Which of the stocks are riskier financial or energy? Financial is riskier, 13.964 is greater than 5.123
financial
(x-mean)
(x-mean)^2
energy
(x-mean)
(x-mean)^2
5.38
-17.8775
319.6050063
10.27
-10.0805
101.6164803
7.91
-15.3475
235.5457563
11.25
-9.1005
82.81910025
7.94
-15.3175
234.6258063
12.46
-7.8905
62.25999025
9.76
-13.4975
182.1825063
13.91
-6.4405
41.48004025
11.91
-11.3475
128.7657563
16.75
-3.6005
12.96360025
14.65
-8.6075
74.08905625
19.07
-1.2805
1.63968025
15.23
-8.0275
64.44075625
19.07
-1.2805
1.63968025
15.37
-7.8875
62.21265625
20.31
-0.0405
0.00164025
15.83
-7.4275
55.16775625
20.82
0.4695
0.22043025
18.93
-4.3275
18.72725625
21.03
0.6795
0.46172025
19.24
-4.0175
16.14030625
21.16
0.8095
0.65529025
21
-2.2575
5.09630625
21.46
1.1095
1.23099025
24.01
0.7525
0.56625625
21.74
1.3895
1.93071025
27.05
3.7925
14.38305625
23.51
3.1595
9.98244025
29.23
5.9725
35.67075625
23.82
3.4695
12.03743025
40.48
17.2225
296.6145063
24.39
4.0395
16.31756025
43.37
20.1125
404.5126563
26.14
5.7895
33.51831025
43.42
20.1625
406.5264063
26.58
6.2295
38.80667025
46.32
23.0625
531.8789063
26.62
6.2695
39.30663025
48.12
24.8625
618.1439063
26.65
6.2995
39.68370025
sum:
465.15
3704.895375
407.01
498.572095
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.