A stock had returns of 15 percent,8 percent,12 percent,-15 percent,and -4 percent for the past five years.Based on these returns,what is the approximate probability that this stock will return at least 20 percent in any one given year?

Question

Quizplus · Accepted Answer

Average return = (0.15 + 0.08 + 0.12 - 0.15 - 0.04)/5 = 0.032σ = √[1/(5 - 1)] [(0.15 - 0.02)² + (0.08 - 0.02)² + (0.12 - 0.02)² + (-0.15 - 0.02)² + (-0.04 - 0.02)²] = 0.1248Upper end of 68 percent range = 0.032 + 0.1248 = 15.68 percentProbability of earning at least 20 percent in any one year is less than 16 percent but greater than 2.5 percent.

A Stock Had Returns of 15 Percent,8 Percent,12 Percent,-15 Percent,and