Final Answer:
a. Scatter plot depicting the annual percentage returns for the Russell 1000 and Dow Jones Industrial Average indices from 1988 to 2012.
b. Sample mean and standard deviation calculated for each index.
c. Sample correlation computed between the two indices.
d. Discussion of similarities and differences in the performance of these indexes.
Step-by-step explanation:
a. A scatter plot is a visual representation that helps us understand the relationship between two variables. In this case, it will show the annual percentage returns for the Russell 1000 and Dow Jones Industrial Average indices from 1988 to 2012.
b. The sample mean and standard deviation provide insights into the central tendency and variability of the data. For each index, the sample mean is calculated as the average of the annual percentage returns, while the standard deviation measures the dispersion around the mean.
c. The sample correlation coefficient is a measure of the strength and direction of the linear relationship between two variables. In this context, it quantifies the correlation between the annual percentage returns of the Russell 1000 and Dow Jones Industrial Average indices.
d. Comparing the performance of these two indices involves analyzing their mean returns, volatility (standard deviation), and the degree of correlation. Similarities might include trends in annual returns, while differences could arise from the size and sectoral composition of the companies in each index, impacting their overall performance.
In conclusion, visualizing the data through a scatter plot and calculating statistical measures allows for a comprehensive understanding of the Russell 1000 and Dow Jones Industrial Average indices, facilitating a nuanced discussion of their similarities and differences in financial performance over the specified period.