A financial advising company has determined that the price-to-earnings ratios for 20 randomly selected publicly traded companies range between 0.9 and 2.9. Given that the price-to-earnings ratios are uniformly distributed, what is the average price-to-earnings ratio?
A) 0.9
B) 1.9
C) 2.9
D) 3.8
E) None of the choices are correct

Question

Quizplus · Accepted Answer

For a uniform distribution, the average (mean) is the midpoint of the range. The midpoint of 0.9 and 2.9 is (0.9 + 2.9) / 2 = 1.9.

A Financial Advising Company Has Determined That the Price-To-Earnings Ratios