Lect15_L6_L7_handout

Lect15_L6_L7_handout - lecture 15, Sampling Distributions I...

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lecture 15, Sampling Distributions I Sample Mean lecture 15, Sampling Distributions I Sample Mean The Stock Return Case ± 6 stocks: Stocks A to F ± Their returns for Year 2008 are -60%, -50%, -40%, - 30%, -20% and -10% resp. ± If we randomly select without replacement a sample of two stocks from the six, what is the distribution of the sample mean?
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lecture 15, Sampling Distributions I Sample Mean lecture 15, Sampling Distributions I Sample Mean The Stock Return Case,( ctd) Population: 6 individual stock returns; any one is as likely to be picked as any other of the six. -0.6 -0.5 -0.4 -0.3 -0.2 -0.1 0.00 0.05 0.10 0.15 0.20 return Probability Population distribution: Uniform distribution with N = 6
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lecture 15, Sampling Distributions I Sample Mean lecture 15, Sampling Distributions I Sample Mean The Stock Return Case ( ctd) Sample two stocks without replacement, what’s the mean of the sampled returns? The sampled stocks could be Stocks A and B, in which case the mean of the sampled returns is ( - 60 % - 50 %) / 2 = - 55 % They could also be Stocks A and C, in which case the mean of the sampled returns is ( - 60 % - 40 %) / 2 = - 50 % ± The mean is a random variable ; its distribution is called its sampling distribution
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lecture 15, Sampling Distributions I Sample Mean lecture 15, Sampling Distributions I Sample Mean The Stock Return Case ( ctd) The population of the sample means Sample Sample Mean A and B -55 % A and C -50 % A and D -45 % A and E -40 % A and F -35 % B and C -45 % B and D -40 % B and E -35 % B and F -30 % C and D -35 % C and E -30 % C and F -25 % D and E -25 % D and F -20 % E and F -15 %
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Sampling Distributions I Sample Mean lecture 15, Sampling Distributions I Sample Mean The Stock Return Case ( ctd) Sampling distribution of the mean of returns Samp. m. -15% -20% -25% -30% -35% -40% -45% -50% -55% Prob. 1/15 1/15 2/15 2/15 3/15 2/15 2/15 1/15 1/15 -0.6 -0.5 -0.4 -0.3 -0.2 -0.1 0.00 0.05 0.10 0.15 0.20 Sample Mean Probability The sampling distribution
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This note was uploaded on 12/30/2009 for the course ISOM ISOM111 taught by Professor Anthonychan during the Fall '09 term at HKUST.

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Lect15_L6_L7_handout - lecture 15, Sampling Distributions I...

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