# UMUC Compute the Mean Annual Return for Common Stocks Questions

Match terms and descriptions
Question 1 options:
1. A sample obtained by random sampling method
numeric values
Convenience Sampling
Unbiased Sample
Standard Deviation
Biased Statistic
Biased Sample
3. The standard deviation of a distribution of statistics
resulting from sampling or an estimate of the
standard deviation
4. A method of sampling where each member of the
population is equally likely to be included in a
sample
Standard Error
5. A method of sampling where easily accessible
members of a population are sampled
Random Sampling
6. The difference between observations in a sample
and observations in the population
Sampling Error
7. A sample obtained by a non-random sampling
method
8. The mean of a distribution of statistics is not equal
to the parameter the statistic estimates
Select all which are biased sampling methods
Question 3 options:
Survey the first 20 people entering a particular coffee store on the last Tuesday before the next election
With each group composed of people with the same characteristic and each person belonging to only one
group, a random sample is taken from each group. Selected people of all groups are surveyed.
Telephone survey
Groups are selected by random sampling. People in the selected groups are surveyed.
Survey two union workers for each non-union worker
Match random sampling method
Question 4 options:
1. Each member of the population has an equal chance
of being selected for a sample
2. Each member of the population is assigned a
unique number. Randomly select numbers from a
list of assigned numbers.
Stratified
Systematic
Cluster
Probability Sampling Method
Simple
3. Each member of the population is assigned a
unique number. The first number is selected
randomly. The remaining numbers are selected at
equal intervals.
4. The population is divided into separate physical
units. Each member of the population belongs to
only one physical unit. Physical units are selected
by simple random sampling. In each of the selected
units, all the members are surveyed.
5. Each member belongs to only one unit of the same
characteristic. A simple random sample of equal
size is taken from each unit.
Select all true statements.
Question 6 options:
The mean of a normally distributed random variable is 0 and the standard deviation is 1.
The Normal probability distribution curve is bell shaped.
The mean of a standardized normally distributed random variable is 0 and the standard deviation is 1.
The standard normal probability distribution is applicable to the standardized value of a normal random
variable = (value – mean)/sd, which is the number of standard deviations (sd) from the mean.
The Normal distribution is important because many processes are approximated by the Normal
distribution, and many statistical procedures assume that the data are normally distributed.
Match Excel functions and descriptions
Question 7 options:
NORM.INV
NORM.S.INV
NORM.DIST
1. Compute a Z-score from a value of a normal
random variable, mean, and standard deviation.
2. Compute the left-tail probability from a Z-score,
and additional input 1 (0=height of curve, 1=area
under curve).
NORM.S.DIST
STANDARDIZE
3. Compute the Z-score from a left-tail probability.
4. Compute the left-tail probability from a value of a
normal random variable, mean, standard deviation,
and additional input 1 (0=height of curve, 1=area
under curve).
5. Compute the value of a normal random variable
from a left-tail probability, mean, and standard
deviation.
Question 9 (4 points)
Select the true statements.
Question 9 options:
Distributions of sample means are approximately normally distributed because the sample mean estimates
the population mean.
Distributions of sample means become approximately normally distributed when sample size is at least 30
for most populations
Distributions of sample means become approximately normally distributed when sample size is at least 50
for highly skewed populations
What is the Z score where 95.0% of the normal distribution is below
that z score and 5.0% of the normal distribution lies above that same z
score?
Question 13 options:
0.39
1.64
0.67
1.28
2.33
0.00
Question 14 (6 points)
The Z values of the limits of the area covering the middle 30.0% of the
area under the normal curve are plus and minus
Question 14 options:
0.43
0.51
0.39
0.47
0.32
0.35
Question 15 (6 points)
If the mean annual return for common stocks is 10.5% and the standard
deviation 12.5%, what is the probability that the stock returns are
greater than 8.0%?
Question 15 options:
15%
0%
40%
53%
58%
47%
Question 16 (6 points)
The distribution of a product is unimodal and roughly symmetric. The
package is labeled 11 oz. If the standard deviation is 0.2 ounces, what
should the process mean be if 3% of the product is underweight?
Question 16 options:
11.38
12.35
13.41
10.41
15.35
14.38
Question 17 (6 points)
If the mean annual return for a stock is 13%, what is the risk (standard
deviation) you would take for a probability of 31% of a return being at
least 17%?
Question 17 options:
17%
14%
8%
11%
21%
6%
Question 18 (6 points)
The Chunkiest cookie factory changed their manufacturing process. The
inspectors sampled 55 11.5-oz packages with mean 11.00 oz and a
standard deviation of 1.5 oz. The CEO asks what is the lower weight
boundary of the middle 55% of package weights.
Question 18 options:
14.69
10.64
8.82
9.87
13.16
11.69
Question 19 (6 points)
If the sample standard deviation is 8.02, what would be the estimated
standard error of sample means for sample size 35? Write the result
with 2 decimal places.
Question 20 (6 points)
The sample proportion is 0.55. What is the estimated standard error of
the sampling distribution of sample proportions for sample of size 45?

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