High Mountain Homes has an expected annual return of 16.1 percent and a standard deviation of 20.3 percent.What is the smallest expected loss over the next month given a probability of 2.5 percent?
A) −6.64 percent
B) −8.67 percent
C) −10.14 percent
D) −12.12 percent
E) −15.13 percent

Question

Quizplus · Accepted Answer

Smallest loss = (0.161 × 1 / 12) − 1.96 × (0.203 × √ 1 / 12) = −10.14 percent

High Mountain Homes Has an Expected Annual Return of 16