**Risk Taking and Investment Decisions**Risk taking is an important part of investing. In order to make suitable investment decisions on behalf of their customers, portfolio managers give a questionnaire to new customers to measure their desire to take financial risks. The scores on the questionnaire are approximately **normally distributed** with a **mean** of 49 and a **standard deviation** of 16. The customers with scores in the bottom 10% are described as "risk averse." What is the questionnaire score that separates customers who are considered risk averse from those who are not? Carry your intermediate computations to at least four decimal places. Round your answer to **one decimal place**. ---### Explanation of Terms:- **Normally Distributed:** This refers to a bell-shaped distribution that is symmetric about the mean, where most observations cluster around the central peak. The probability of occurrences are higher near the mean, decreasing as they move away.- **Mean:** The average score, which is 49 in this context.- **Standard Deviation:** This measures the spread of the data from the mean, which is 16 here. A higher deviation indicates more variability.- **Bottom 10% (Risk Averse):** These are the scores that fall in the lowest 10% of the normal distribution, indicating lower risk tolerance.### Calculation:To find the questionnaire score that distinguishes risk-averse customers, one would typically use the properties of the normal distribution, potentially using a z-score table or statistical software to determine the exact cutoff score at the 10th percentile.This task involves identifying the score below which 10% of the scores fall. This would be solved by calculating the z-score for the 10th percentile and then converting this z-score back to the original score scale using the mean and standard deviation provided.

Given X is normal Distributed with mean µ = 49.0 and standard deviation σ = 16.0 now will use…

Answered: Risk taking is an important part of…

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

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Given the following investment returns from two stocks:Stock A: 5%,6%,7%,9%,23% (mean = 10% and standard deviation = 7.416%)Stock B: 50%,60%,70%,90%,230% (mean = 100% and standard deviation = 74.16%).Which stock has the greatest relative risk? Which stock should a risk seeking investor choose? Two correct answers 1. Stock A has the greatest relative risk. 2. Stock B has the greatest relative risk. 3. Both stocks have the same amount of relative risk. 4. A risk seeking investor should invest in Stock A. 5. A risk seeking investor should invest in Stock B. 6. A risk seeking investor should invest in either of the two stocks since they are equally attractive.
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A researcher investigates the relationship between study habits and college achievement. College seniors were administered the Inventory of Study Habits Survey (X) to measure study habits and the College BASE (Y) was used to measure overall college achievement. The correlation between the study habits and achievement was found to be 0.784. The researcher concluded that students with higher scores on the Study Habits Survey will always have higher college achievement scores on the College BASE. Is the researcher's conclusion correct? Why or why not?
4. Straight As now, healthy later A study by Pamela Herd of the University of Wisconsin-Madison found a link between high-school grades and health. Analyzing data from the Wisconsin Longitudinal Study, which has tracked the lives of thousands of Wisconsin high-school graduates from the class of 1957, Herd found that students with higher grade-point averages were more likely to say they were in excellent or very good health in their early 60s. Does this mean people will live healthier lives if they increase their GPA? Explain.47
3. ACT scores are roughly Normal with mean 20.8 and standard deviation 4.8, and SAT scores are roughly Normal with mean 1026 and standard deviation 209. Some students take both. For those students, the correlation between the two scores is 0.72. a. What's the equation of the straight line that you'd use to predict ACT scores based on SAT scores? b. I got a 1300 on the SAT, and I'm planning to take the ACT. Predict what I might get, c. What's the equation of the straight line that you'd use to predict SAT scores based on ACT scores? d. My friend got a 27 on the ACT, and she's planning to take the SAT. Predict what she might get. e. How come you're predicting both that I'll do worse than her on the ACT and that she will do worse than me on the SAT? 4. Draw a simple random nlc of size 15 from the labels 40os01, 402.
A successful basketball player has a height of 6 feet 11 inches, or 211 cm. Based on statistics from a data set, his height converts to the z score of 5.17. How many standard deviations is his height above the mean?
4. time to try out multiple predictor variables. take a look at the data shown here, where the outcome is becoming a great chef. we suspect that variables such as number of years of experience cooking, level of formal culinary education, and number of different positions (sous chef, pasta station, etc.) all contribute to rankings or scores on the great chef test. a. which are the best predictors of a chef’s score? b. what score can you expect from a person with 12 years of experience and a level 2 education who has held five positions?
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Given that the mean and standard deviation are $24 and $3. Calculate the variance.

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