Question

You own a stock with an average return of 14.6 percent and a standard deviation of 21.2 percent. In any one given year, you have a 95 percent chance that you will not lose more than _____ percent nor earn more than ____ percent on this stock. g

Answer 1

Answer:

-27.8% and 57%

Step-by-step explanation:

Your stock with an average return of 14.6 percent

Standard deviation of 21.2 percent.

You have 95% probability range = 14.6% ± (2 × 21.2%)

You will not lose more than = 14.6% - (2 × 21.2%)

                                              = 0.146 - ( 2 × 0.212)

                                              = 0.146 - 0.424

                                              = -0.278 = -27.8%

You will not earn more than = 14.6% + ( 2 × 21.2%)

                                               = 0.146 + ( 2 × 0.212 )

                                               = 0.146 + 0.424

                                               = 0.57 = 57%

You have a 95% chance that you will not lose more than -27.8% nor earn more than 57% on this stock.