Asked by Bui Cam Tu _ K14 FUG CT on Jun 20, 2024
Verified
An investment has an average return of 4.7%.The standard deviation of returns on this investment is 25.81%.Given this information,what is the range of return 68% of the time?
A) 30.51% to -21.11%
B) 4.70% to 25.81%
C) 70.73% to -21.11%
D) 8.3% to 54.13%
Standard Deviation
A statistical measure that represents the dispersion or variation of a set of values, commonly used to assess risk in finance.
Average Return
Average return refers to the mean amount of profit or loss generated by an investment over a specified period.
- Pinpoint the correct risk assessments for differing investment decisions.
Verified Answer
SP
stephanie petithommeJun 23, 2024
Final Answer :
A
Explanation :
The range of return 68% of the time for a normal distribution is within one standard deviation of the mean. Therefore, adding and subtracting the standard deviation (25.81%) from the mean (4.7%) gives a range of 30.51% (4.7% + 25.81%) to -21.11% (4.7% - 25.81%).
Learning Objectives
- Pinpoint the correct risk assessments for differing investment decisions.