You are introduced to an investment that has an expected return of 20% equal to the standard deviation of the distribution of returns.What is the probability that the investment will lose some of your initial investment in the first year?

Question

Quizplus · Accepted Answer

expected return = std = .2
P(of investment loss)= P( return < 0)
One standard deviation to the left of the expected return is 20% - 20% = 0
===> P(return < 0)= 16% (or 50% - 34%)

You Are Introduced to an Investment That Has an Expected