Question: 2. Previously, you computed the sample average and sample standard deviation for the daily returns on your stock since 2006. Suppose the underlying population average
2. Previously, you computed the sample average and sample standard deviation for the daily returns on your stock since 2006. Suppose the underlying population average return, mu, was equal to your observed sample average, xbar, and likewise suppose the underlying population standard deviation, sigma, was equal to your observed sample standard deviation, s.
(a) Assuming returns are Normally distributed, sketch and label the density curve.
(b) On the above graph, shade and label the area under the curve that corresponds to the probability of getting a negative return. Hint: locate the zero-point.
(c) Assuming a Normal distribution, use the z-table to find the probability that your stock yields a negative return tomorrow. Check your work with Excel.
| Sum | 271.9804701 |
| N | 4050 |
| Sample Average | 0.067155672 |
| Sample Standard Deviation | 0.259144114 |
| min | -18.70229211 |
| max | 21.66955554 |
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