A Return Series Has an Arithmetic Mean of 10

question 50

Multiple Choice

A return series has an arithmetic mean of 10.5% and standard deviation of 13%.Assuming the returns are normally distributed what is the range of returns that an investor would expect to receive 90% of the time?

• A) 10.5% to 13%
• B) -2.5% to 23.5%
• C) -28.5 to 49.5%
• D) -15.5% to 36.5%
• E) 0% to 10.5%

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Definitions:

SST

Total Sum of Squares, a measure in statistics that quantifies the total variance in a dataset.

Yearly Income

The total amount of money earned by an individual or entity in one year.

Estimated Regression

A statistical process for estimating the relationships among variables, predicting one variable based on the value of others.

SSE

Sum of Squared Errors, a measure of the difference between the observed and predicted values in statistical models.