The S&P TSX Composite index delivered annual returns of 17.61%,-8.71%,7.19% and 12.99% from 2010 to 2013.What is a 95% confidence interval for the 2014 return?

Question

Quizplus · Accepted Answer

C) Average return = (17.61 - 8.71 + 7.19 + 12.99) / 4 = 7.27;
Variance = ((17.61 - 7.27)^2 + (-8.71 - 7.27)^2 + (7.19 - 7.27)^2 + (12.99 - 7.27)^2 ))/(4 - 1) = 131.67
Standard deviation = 131.67^0.5 = 11.47%
Average +/- 2 × standard deviation = 7.27 - 11.47 to 7.27 + 11.47 = -4.2% to 18.74%

The S&P TSX Composite Index Delivered Annual Returns of 17