If the Expected Return Is 10%, the Standard Deviation Is

question 51

True/False

If the expected return is 10%, the standard deviation is 3%, about 95% of the time returns will be expected to fall between 1% and 19%.

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Definitions:

Constant Rate

A fixed, unchanging rate at which a specific quantity grows or decays over time.

Compounded Annually

The process of earning interest on both the initial principal and the accumulated interest from previous periods, calculated once per year.

Compounded Monthly

A calculation method for interest where the interest earned is added to the principal at the end of each month, causing subsequent interest to be based on the increased balance.

Effective Annual Rate

The real interest rate on an investment or loan, considering the effects of compounding over a year.