Question: Consider the monthly stock returns presented in Table 1.

(a) What return is the bottom quintile?

(b) What return is the top quintile?

(c) Assume that a stock is labeled a “loser” if its return falls below the bottom quintile and a “winner” if its return lies above the top quintile. List the “winner” and “loser” companies.

(d) Assume that returns in a population are approximately normally distributed with mean 0.15 and standard deviation 0.1. On this occasion, let us define as “winners” the stocks whose return falls into the highest 9 per cent of the return distribution. What is the level of return above which a stock is considered to be a “winner”?