# 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

2. Value quantifying the spread about the mean of

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

Select 3 correct answer(s)

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.

Select 4 correct answer(s)

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.

Select 2 correct answer(s)

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.

Your Answer:

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?

Your Answer:

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