The 95% probability range for returns is defined as the:
A) Risk premium plus or minus two times the standard deviation.
B) Risk premium plus or minus two times the variance.
C) Mean plus or minus two times the standard deviation.
D) Mean plus or minus three times the standard deviation.
E) Mean plus or minus three times the variance.

Question

Quizplus · Accepted Answer

The 95% probability range for returns is defined as the mean plus or minus two times the standard deviation. This is based on the empirical rule, which states that for a normal distribution, approximately 95% of the data falls within two standard deviations of the mean.

The 95% Probability Range for Returns Is Defined as The