Chapter 4.3, Problem 118E

To determine

To explain how this could happen.

Explanation of Solution

In the question, when the mean is much higher than the median then this means that there are a few very unusually high changes in the stock prices while most of the changes in the stock prices are negative. Thus, the distribution of the change in the stock prices would be strongly skewed to the right. The mean will then be strongly influenced by the few unusually high stock price changes while the median is mostly unaffected by these few unusually high stock price changes and this then causes the mean to be much higher than the median.