Use the table for the question(s)below.
Consider the following realized annual returns:

-The average annual return over the period 1926-2009 for small stocks is 22.1%,and the standard deviation of returns is 22.1%.Based on these numbers,what is a 95% confidence interval for 2010 returns?
A)11.1%,33.2%
B)0%,44.2%
C)-22.1%,44.2%
D)-22.1%,66.3%
E)-12.5%,45.7%

Question

Use the table for the question(s)below.
Consider the following realized annual returns:
 
-The average annual return over the period 1926-2009 for small stocks is 22.1%,and the standard deviation of returns is 22.1%.Based on these numbers,what is a 95% confidence interval for 2010 returns?
A)11.1%,33.2% 
B)0%,44.2% 
C)-22.1%,44.2% 
D)-22.1%,66.3% 
E)-12.5%,45.7%

Quizplus · Accepted Answer

A 95% confidence interval is calculated as the mean plus or minus 1.96 times the standard deviation. Here, it is 22.1% ± (1.96 * 22.1%), which results in the interval -22.1% to 66.3%.

Use the Table for the Question(s)below