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Performance of stock screeners. In Exercise 2.44 (p. 71) you learned that stock screeners are automated...

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Basic Math

Performance of stock screeners. In Exercise 2.44 (p. 71) youlearned that stock screeners are automated tools used by investmentcompanies to help clients select a portfolio of stocks to investin. The table below lists the annualized percentage return oninvestment (as compared to the Standard & Poor’s 500 Index) for13 randomly selected stock screeners provided by the AmericanAssociation of Individual Investors (AAII).

9.0 -.1 -1.6 14.6 16.0 7.7 19.9 9.8 3.2 24.8 17.6 10.7 9.1

a. Find a 90% confidence interval for the average annualizedpercentage return on investment of all stock screeners provided byAAII. Interpret the result.

b. Recall that a negative annualized return reflects a stockportfolio that performed worse than the S&P 500. On average, dothe AAII stock screeners perform worse or better than the S&P500? Explain.
c. What assumption about the distribution of the annualizedpercentage returns on investment is required for the inference,part b, to be valid? Is this assumption
reasonably satisfied?

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