You just agreed to take a position of economic advisor for inosmart

Instructions

  • Answer all questions.
  • Show your approach.
  • Organize your work suitably.
  • The due date is Sunday at 11:59 PM EST.

Question 1

You just agreed to take a position of Economic Advisor for InoSmart Inc. The General Manager of the company asked you to describe the nature of salaries paid by the company to its employees last year. The Chief Accountant of the company delivers to you the aggregate monthly salaries data as follows:

Months

Aggregate Salaries

January

743430

February

705320

March

67950

April

780240

May

801970

June

69440

July

816550

August

734380

September

791110

October

753370

November

717640

December

805500

  • Summarize the data and Provide statistical conclusion based on your statistical output. (Show your statistical procedures that led you to the conclusion.)
  • Provide your results to the General Manager (in one or two sentences).

Question 2

As a financial advisor, you are assigned a new client who is considering investing in one of two stocks, A or B. The table below shows information about the performance of stocks A and B last year.

(Average) Return

Standard Deviation

Stock A

15%

8.3%

Stock B

15%

2.1%

  1. What factors would you consider as a financial advisor in making decisions about the data above?
  2. Based on these factors, what stock would you recommend to the client?
  3. What reasons will you convey to your client to justify your decision in recommending this stock?
  4. How will this recommendation impact the client?

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