# Morningstar's Rating of 1208 Company Stocks: Analyzing a Sample of 40 Stocks

## What are the point estimates for various Morningstar ratings among the selected 40 company stocks?

a) What is the point estimate for the proportion of stocks that receive Morningstar's highest rating of 5 Stars? (to 2 decimals)

b) What is the point estimate for the proportion of Morningstar stocks rated low with respect to business risk? (to 2 decimals)

c) What is the point estimate for the proportion of Morningstar stocks rated 3 Stars or less?

**Answer:**

a) 0.125

b) 0.50

c) 0.475

**Solution and Explanation:**

Among the selected 40 stocks, each assigned with different Morningstar ratings, we can calculate the point estimates for the proportions as follows:

**a) Point estimate for 5 Stars:**

Ameren Corp is rated with 1 Star High. Hence, the proportion of stocks receiving Morningstar's highest rating (5 Stars) is calculated as 5/40 = 0.125.

**b) Point estimate for Low-rated stocks:**

Apple Inc is rated with 2 Star Low. Out of the 40 selected stocks, 20 are rated low, resulting in a proportion of 0.50.

**c) Point estimate for 3 Stars or less:**

Bank of New York Mellon Corp is rated with 3 Star Very Low. Among the 40 selected stocks, there are 19 stocks rated 3 Stars or less, giving a proportion of 0.475.

These point estimates provide insights into the distribution of Morningstar ratings among the sample of 40 company stocks, helping investors in assessing the performance and risk associated with each stock.