Suppose the returns on an asset are normally distributed. Suppose the historical

Question

Suppose the returns on an asset are normally distributed. Suppose the historical average annual return for the asset was 4.8 percent and the standard deviation was 14.3 percent.

What range of returns would you expect to see 95 percent of the time? (Enter your answers for the range from lowest to highest. Negative amounts should be indicated by a minus sign. Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16))

What range would you expect to see 99 percent of the time? (Enter your answers for the range from lowest to highest. Negative amounts should be indicated by a minus sign. Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16))

Please help and show work if possible

Suppose the returns on an asset are normally distributed. Suppose the historical average annual return for the asset was 4.8 percent and the standard deviation was 14.3 percent.

Explanation / Answer

95% is the mean plus or minus 1.96 standard deviations.

So 4.8 +/- 1.96*14.3=

99% is the mean plus or minus 2.576 standard deviations

So 4.8 +/- 2.576 *14.3

I assume you can take it from here and do the arithmetic.

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.