From 1950 to 2007, the Average Return in the Stock

question 94

Multiple Choice

From 1950 to 2007, the average return in the stock market, as measured by the S&P 500, was 13.2 percent and a standard deviation of 17 percent. Given this information, which of the following statements is correct?

• A)With an average return this high, it are unlikely that an investor will lose money in the stock market in the next year or two.
• B)With a standard deviation this high, it are likely that an investor will lose money in some years over a 25-year investment period.
• C)This investment are not very good since the standard deviation are greater than the average return.
• D)All of these statements are correct.

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