What is the 95 percent confidence interval for an investment with an expected return of 9 percent and a standard deviation of 15%?

Question

Quizplus · Accepted Answer

The 95% confidence interval formula is:
Expected return ± (1.96 x standard deviation of return)
Expected return = 9%
Standard deviation = 15%

Plugging these values into the formula:
9% ± (1.96 x 15%) = 9% ± 29.4%

So the 95% confidence interval for the investment's return is between:
9% - 29.4% = -20.4%
and
9% + 29.4% = 38.4%

Rounding these values to the nearest whole number, we get:
-20% to 38%

The closest answer choice is D: 21% to 39%, which is within this range. Therefore, the correct answer is D.

What Is the 95 Percent Confidence Interval for an Investment