According to the stock index, the return from January 2014 to December 2014 shows the average of 7% with standard deviation of 2.5%. 1) According to the Central Limit Theorem (CLT), what the sample mean distribution if we randomly pick 25 stocks? 2)  What is the probability that the sample mean is higher than 8% if we randomly select 25 stocks? 3)  What is the probability that the sample mean is lower than 6.5% if we randomly select 100 stocks? 4)  Suppose the population mean is unknown, but we know the population standard deviation is 2.5. What is the 95% confidence interval of population mean if the sample mean is 7.2$ and the sample standard deviation is 3% from randomly selected 25 stocks?

Definition Definition Measure of central tendency that is the average of a given data set. The mean value is evaluated as the quotient of the sum of all observations by the sample size. The mean, in contrast to a median, is affected by extreme values. Very large or very small values can distract the mean from the center of the data. Arithmetic mean: The most common type of mean is the arithmetic mean. It is evaluated using the formula: μ = 1 N ∑ i = 1 N x i Other types of means are the geometric mean, logarithmic mean, and harmonic mean. Geometric mean: The nth root of the product of n observations from a data set is defined as the geometric mean of the set: G = x 1 x 2 ... x n n Logarithmic mean: The difference of the natural logarithms of the two numbers, divided by the difference between the numbers is the logarithmic mean of the two numbers. The logarithmic mean is used particularly in heat transfer and mass transfer. ln x 2 − ln x 1 x 2 − x 1 Harmonic mean: The inverse of the arithmetic mean of the inverses of all the numbers in a data set is the harmonic mean of the data. 1 1 x 1 + 1 x 2 + ...