Pad 3:19 PM mathxl.com Google MGMT-326-002 ( Course Home O Do Homework.-. You Ob

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Pad 3:19 PM mathxl.com Google MGMT-326-002 ( Course Home O Do Homework.-. You Observe A Por You Observe A Por. You Observe A Por MGMT 326-Fundamentals of Corporate Finance-Berk/DeMarzo Gabriel Pacheco &I; 3/25/18 3:19 PM Homework: Chapter 11 Homework Score: 0 of 1 pt P 11-22 (similar to) You observe a portfolio for five years and determine that its 7 of 12 (3 complete) Hw Score: 20.83%, 2.5 of 12 pts Question Help average return is 12.1% and the standard deviation of its returns in 19.1%, would a 30% loss next be outside the 95% confidence interval for this portfolio? The low end of the 95% prediction interval is %. (Enter your response as a percent rounded to one decimal place A O B c D. Yes, you can be confident that the portfolio will not lose more than 30% of its value next year. This is because the low end of the prediction interval is greater than-30%. Yes, you can be confident that the portfolio will not lose more than 30% of its value next year. This is because the low end of the prediction interval is less than-30%. No, you cannot be confident that the portfolio will not lose more than 30% of its value next year. This is because the low end of the prediction interval is greater than-30%. No, you cannot be confident that the portfolio will not lose more than 30% of its value next year. This is because the low end of the prediction interval is less than-30%. click to select your answer(s) and then click Check Answer Clear Al

Explanation / Answer

Answer is   A ) Yes you can be confident that the portfolio will not lose more than 30% of its value next year. This is because the low end of the prediction interval is greater than-30%

The low end of the 95% prediction interval is -26.1%.

Note:

Standard deviation of 95%

Confident Upper tail = 12.1% + 2*19.1% = 50.3%

Lower tail = 12.1% - 2*19.1% = - 26.1%

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