Question

For the class "Time Series Modeling"

Stock B: 6% return with prob. 0.7; -8% return with prob. 0.3: Mean=1.8%, std=6.42 3

Stock C: 45.42% return with prob. 0.7; -100% return with prob. 0.3: Mean=1.8%, std=66.64

- Calculate the mean values and the standard deviations of the Stock return-Stock B & Stock C.

Consider a large bank that wants to estimate the average amount owed by delinquent debtors µ. A random sample of size 100 is selected and found the sample mean is $230. Suppose it’s known that the standard deviation of the amount owed for all delinquent accounts is σ = 90$. Get a 95% confidence interval for µ.

- Calculate the rough CI for the mean of SP500 index returns.

Answer 1

Consider a large bank that wants to estimate the average amount owed by delinquent debtors µ. A random sample of size 100 is selected and found the sample mean is $230. Suppose it’s known that the standard deviation of the amount owed for all delinquent accounts is σ = 90$. Get a 95% confidence interval for µ.