An Asset Has an Average Annual Historical Return of 11

question 4

Multiple Choice

An asset has an average annual historical return of 11.6 percent and a standard deviation of 17.8 percent. What range of returns would you expect to see 95 percent of the time?

• A)−41.8% to + 65.0%
• B)−34.4% to + 53.6%
• C)−24.0% to + 47.2%
• D)−6.2% to + 29.4%
• E)−5.4% to + 41.0%

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Definitions:

Mean

The arithmetic average of a set of values, or distribution, calculated by summing the values and then dividing by the number of values.

Standard Normal

A special case of the normal distribution with a mean of zero and a standard deviation of one, commonly used in z-score calculations.

Area

An evaluation of the area covered by a shape or surface in two dimensions, calculated in units².

Area

In statistics, often refers to the region under the curve of a probability distribution representing the probability of a range of outcomes.