Assume That the Average Annual Historical Return for Shares That

question 36

Multiple Choice

Assume that the average annual historical return for shares that comprise the Australian All Ordinaries index is 10.5%, and the standard deviation of returns is 18.5%. Based on these numbers what is a 95% prediction interval for 2016 returns?

• A)-10%, 10%
• B)-18.5%, 18.5%
• C)-26.5%, 47.5%
• D)-37%, 37%

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Definitions:

Dependence

A situation in which the condition or fortunes of a person or entity are affected by another.

Centralization

The concentration of control and decision-making authority in a centralized location or group within an organization.

Authority

The capacity to direct, adjudicate, and ensure observance.

Consistency

The quality of achieving a level of performance or behavior that does not vary greatly in quality over time.