A security produced returns of 13 percent,18 percent,9 percent,23 percent,and -17 percent over the past five years,respectively.Based on these five years,what is the probability that this stock will earn more than 24.76 percent in any one given year?

Question

Quizplus · Accepted Answer

Average return = (0.13 + 0.18 + 0.09 + 0.23 - 0.17)/5 = 0.092σ² = [(0.13 - 0.092)² + (0.18 - 0.092)² + (0.09 - 0.092)² + (0.23 - 00.092)² + (-0.17 - 00.092)²]/(5 - 1) = 0.024220σ = √0.024220 = 0.155628Upper end of 68 percent probability range = 0.092 + 0.155628 = 24.76 percentProbability of earning more than 24.76 percent = (1 - 0.68)/2 = 16 percent

A Security Produced Returns of 13 Percent,18 Percent,9 Percent,23 Percent,and