Stocks
One Thousand Stocks Watched by a Financial Advisory Company

Short Answer

Stocks
One thousand stocks watched by a financial advisory company are advertised as having an average return-on-equity (ROE)of 11.4 percent and a standard deviation of 3 percent.An inquiry is made by a prospective client who finds that the ROE is supposed to be normally distributed for these stocks.The prospective client obtains a list of the stocks and randomly samples 300 stocks and records the ROE.The results are: $$\begin{array}{l}\text { Re turn-on-Equity }\\\begin{array} { | l | c c | } \hline \text { Category } & \begin{array} { c } \text { Observed } \\\text { Frequency }\end{array} & \begin{array} { c } \text { Expected } \\\text { Frequency }\end{array} \\\hline \text { Under } 6 & 14 & 9.93 \\6 - \text { under } 10 & 92 & 85.83 \\10 - \text { under } 14 & 146 & 146.58 \\14 - \text { under } 18 & 46 & 53.49 \\18 \text { or above } & 2 & 4.17 \\\hline \text { Total } & 300 & 300 \\\hline\end{array}\end{array}$$
-What are the appropriate degrees of freedom based on the above data?