A Hedge Fund Returns on Average 26% Per Year with a Standard

question 62

Multiple Choice

A hedge fund returns on average 26% per year with a standard deviation of 12%. Using the empirical rule, approximate the probability the fund returns over 50% next year.

• A) 0.5%
• B) 1%
• C) 2.5%
• D) 5%

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Definitions:

Subtractive Colours

Colors produced by the removal of light wavelengths, commonly seen in pigment mixing.

Top-Down

An approach or process that starts from the general to the specific, often used in information processing or organizational decision-making.

Bottom-Up

An approach or process that begins with specific details or elements and builds up to a comprehensive picture or understanding.

Feature Analysis

The process of breaking down and examining the elements or structure of information, often used in cognitive psychology to understand how people recognize patterns and objects.