A Return Series Has an Arithmetic Mean of 12

question 7

Multiple Choice

A return series has an arithmetic mean of 12.8% and standard deviation of 7.8%. Assuming the returns are normally distributed what is the range of returns that an investor would expect to receive 95% of the time?

• A)12.8% to 20.6%
• B)-10.6% to 36.2%
• C)-2.8% to 28.4%
• D)-12.8% to 20.6%
• E)10.6% to 36.2%

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Definitions:

Fed Targeting

Fed targeting involves the Federal Reserve using monetary policy tools to aim for specific economic targets, such as inflation rates or employment levels.

Money Supply

The whole assembly of monetary resources in an economy at a certain time period.

Interest Rate

is the cost of borrowing money, typically expressed as a percentage of the principal, charged by lenders to borrowers.

Federal Reserve

The central banking system of the United States, responsible for monetary policy, regulation of financial institutions, and maintaining stability in the financial system.