Stock W has an expected return of 12% with a standard deviation of 8%.If returns are normally distributed,then approximately two-thirds of the time the return on stock W will be
A) between 12% and 20%.
B) between 8% and 12%.
C) between -4% and 28%.
D) between 4% and 20%.

Question

Quizplus · Accepted Answer

The rule for a normal distribution states that approximately 68% (or two-thirds) of the data falls within one standard deviation of the mean. For Stock W, with a mean (expected return) of 12% and a standard deviation of 8%, one standard deviation above and below the mean would be 12% + 8% = 20% and 12% - 8% = 4%, respectively. Therefore, approximately two-thirds of the time, the return on Stock W will be between 4% and 20%.

Stock W Has an Expected Return of 12% with a Standard