Q1)The Capital Asset Pricing Model (CAPM) is a financial model that assumes returns on a portfolio are normally distributed.Suppose a portfolio has an average annual return of 14.7% (i.e., an average...

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Q1)The Capital Asset Pricing Model (CAPM) is a financial model that assumes returns on a portfolio are normally distributed.Suppose a portfolio has an average annual return of 14.7% (i.e., an average gain on 14.7%) with a standard deviation of33%. A return of 0% means the value of the portfolio doesn't change, a negative return means that the portfolio losesmoney, and a positive return means that the portfolio gains money. Determine the following:1. What percentage of years does this portfolio lose money, (i.e. have a return less than 0%)?2. What is the cutoff for the highest 15% of annual returns with this portfolio?See CAP here https://en.wikipedia.org/wiki/Capital asset_pricing_model
Q2)Past experience indicates that because of low morale, a company loses 20 hours a year per employee due to lateness andabsenteeism. Assume that the standard deviation of the population is 6 and normally distributed.The HR department implemented a new rewards system to increase employee morale, and after a few months it collecteda random sample of 20 emplovees and the annualized absenteeism was 14.1. Could you confirm that the new rewards system was effective with a 90% confidence?2. An HR subject matter expert would be very happy if the program could reduce absenteeism by 20% (i.e. to 16 hours).Given the current sampling parameters (sample size of 20 and std. dev. of population. 6), what is the probability thatthe new rewards svstem reduced absenteeism to 16 hours and vou miss it?3. What should the sample size be if you want B to be 5%
Question3)Chi-Square Goodness of fitPlease access and review section 6.3.5 in the Openlntro Statistics textbook:Diez, D., Getinkaya-Rundel, M. & Barr, C (2019). Openintro Statistics (4th Ed.). https://leanpub.com/openintro-statisticsGiven the information in section 6.3.5, write python code for the following:Calculate the expected values based on the geometric distribution with a probability of 53.2%• Compare the expected vs. the observed values from the textbook using the Chi-Square distributionReach a conclusionExplain what is the business impact of your conclusion
Answered 1 days AfterMar 18, 2022

Answer To: Q1)The Capital Asset Pricing Model (CAPM) is a financial model that assumes returns on a portfolio...

Suraj answered on Mar 19 2022
109 Votes
Solution 1:
The returns on a portfolio follows normal distribution with mean 14.7% and standard dev
iation 33%.
Thus, population mean
Standard deviation,
Let X be the random variable denotes the number of years a portfolio has annual return.
1.
Percentage of years does this portfolio losses money that is portfolio return is less than 0% is calculated as follows:
Hence, Percentage of years does this portfolio losses money that is portfolio return is less than 0% is 32.8%.
2.
The cutoff for the highest 15% of annual returns for this portfolio is calculated as follows:
From the standard normal table, the z-score which satisfy the above equation is 1.04.
Hence, the cutoff is calculated as follows:
Hence, the cutoff for the highest 15% of annual returns for this portfolio is 49.02%.
Solution 2:
Claim: The new reward system to increase employee morale that is reduces the annual absenteeism rate.
The population mean is given is 20 hours and the population standard deviation is...
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