Solutions to Problem Set 2

# Most people should have found that the mean of

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Unformatted text preview: Generate a sequence of 500 random numbers using the command =RAND( ). For parts (2a) (2d), your answers should depend on the specific random numbers obtained. Most people should have found that the mean of largest samples is closer to the true mean: 0.5. a) What is the mean of your first 2 numbers? b) What is the mean of the first 10 numbers? c) What is the mean of the first 250 numbers? d) What is the mean of the full sequence? e) Should we expect the mean of the full sequence to be closer or further from 0.5 than the initial sequences? Justify based on one statistical result discussed in class. By the law of large numbers, the mean of a large enough sample should be very close to the true mean: 0.5. For small samples, however, the sample mean may be far from 0.5. Question 3. This question asks you to study the distribution of the stock of General Electric. You can find the historical prices of GE on the Canvas website. The rate of return of a stock is determined by (pt/pt ­1...
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