On 2 June 2017, an analyst estimated that possible returns for the S&P500 for Ju

Question

On 2 June 2017, an analyst estimated that possible returns for the S&P500 for June 2017 had the following distribution:

  4.3% of the possible returns for June 2017 were –5.0% or less

29.8% of the possible returns for June 2017 were between –5.0% and –1.0%

[see https://seekingalpha.com/article/4078283-odds-favor-1-percent-5-percent-change-s-and-p-500-june-direction ]

If the possible returns for the S&P500 for June 2017 follow a normal curve, what percentage of returns fall between +1.0% and +5.0%?

A. 29.8%

B. 31.0%

C. 34.3%

D. 36.9%

E. 39.5%

A. 29.8%

B. 31.0%

C. 34.3%

D. 36.9%

E. 39.5%

Explanation / Answer

Since the possible returns follow a normal curve, the distribution is symmetric. Hence, possible returns between -5% and -1% will be same as possible returns between +1% and +5%.

Hence, the correct choice is Option (A) 29.8%. (Ans).

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