A stock returned 11 percent,16 percent,−7 percent,and −13 percent annually for the past 4 years.Based on this information,what is the 99.74 percent probability range for any one given year?

Question

Quizplus · Accepted Answer

Mean = (0.11 + 0.16 − 0.07 − 0.13)/ 4 = 0.0175,or 1.75% σ ={[(0.11 − 0.0175)² + (0.16 − 0.0175)² + ( −0.07 − 0.0175)² + (−0.13 − 0.0175)²] / (4 − 1)}^.5 = 0.1394,or 13.94% 99.74% probability range = 1.75% ± (3 × 13.94%)= −40.06 to 43.56%

A Stock Returned 11 Percent,16 Percent,−7 Percent,and −13 Percent Annually