A stock has returns of 18 percent,15 percent,-21 percent,and 6 percent for the past four years.Based on this information,what is the 95 percent probability range of returns for any one given year?

Question

Quizplus · Accepted Answer

Average return = (0.18 + 0.15 - 0.21 + 0.06)/4 = 0.045σ = [1/3{(.18-.045)^2 (.15-.045)^2 (-.21 -.045)^2 (.06-.045)^2 (.06-.045)^2}]^(1/2 = .17748295% probability range = 0.045 ± (2 × 0.177482) percent = -31.00 to 40.00 percent

A Stock Has Returns of 18 Percent,15 Percent,-21 Percent,and 6