A mutual fund's average annual return is 8% and its standard deviation is 8%. An investor would expect 95% of the fund's returns to fall within what range?

Question

Quizplus · Accepted Answer

The range of returns that an investor can expect 95% of the time is given by the mean plus or minus 1.96 times the standard deviation. In this case, the mean is 8% and the standard deviation is 8%, so the range is 8% +/- 1.96 * 8% = 8% +/- 15.68%. Therefore, the investor can expect 95% of the fund's returns to fall between -7.68% and 23.68%.

A Mutual Fund's Average Annual Return Is 8% and Its