91Ó°ÊÓ

Stock market participation and IQ. Refer to The Journal of Finance (December 2011) study of whether the decision to invest in the stock market is dependent on IQ, Exercise 3.46 (p. 182). Recall that an IQ score (from a low score of 1 to a high score of 9) was determined for each in a sample of 158,044 Finnish citizens. Also recorded was whether or not the citizen invested in the stock market. The accompanying table gives the number of Finnish citizens in each IQ score/investment category. Which group of Finnish citizens (market investors or noninvestors) has the highest average IQ score?

IQ Score	Invest in market	No investment	Totals
1	893	4659	5552
2	1340	9409	10749
3	2009	9993	12002
4	5358	19682	25040
5	8484	24640	33124
6	10270	21673	31943
7	6698	11260	17958
8	5135	7010	12145
9	4464	5067	9531
Totals	44651	113393	158044

Step by step solution

01

Given information

The table shows the citizens in each IQ score or investment category. Here, it is also recorded that the citizen are invested in the stock market.

02

Calculating highest average IQ score

IQ Score	Invest in market	No investment	Totals	Average
1	893	4659	5552	28.46
2	1340	9409	10749	14.7
3	2009	9993	12002	13.16
4	5358	19682	25040	6.31
5	8484	24640	33124	4.77
6	10270	21763	31943	4.94
7	6698	11260	17958	8.8
8	5135	7010	12145	13.01
9	4464	5067	9531	16.58

Thus, the highest average IQ is 28.46 for IQ score 1.

Unlock Step-by-Step Solutions & Ace Your Exams!

• Full Textbook Solutions

  Get detailed explanations and key concepts

• Unlimited Al creation

  Al flashcards, explanations, exams and more...

• Ads-free access

  To over 500 millions flashcards

• Money-back guarantee

  We refund you if you fail your exam.

Over 30 million students worldwide already upgrade their learning with 91Ó°ÊÓ!