The Average Annual Return Over the Period 1886-2006 for Stocks

question 17

Multiple Choice

The average annual return over the period 1886-2006 for stocks that comprise the S&P 500 is 10%,and the standard deviation of returns is 20%.Based on these numbers,what is a 95% confidence interval for 2007 returns?

• A)-15%,25%
• B)-20%,40%
• C)-30%,50%
• D)-30%,40%

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Definitions:

Tying Contract

A requirement imposed by a seller that a buyer purchase another (or other) of its products as a condition for buying a desired product; a practice forbidden by the Clayton Act.

Price-fixing

An illegal agreement among competitors to maintain prices at a certain level, preventing the forces of competition from dictating market prices.

Sherman Act

The federal antitrust law of 1890 that makes monopoly and conspiracies to restrain trade criminal offenses.

Federal Energy Regulatory Commission

The Federal Energy Regulatory Commission (FERC) is a U.S. government agency that regulates the interstate transmission of electricity, natural gas, and oil.