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Over the past four years, a stock produced returns of 6 percent, 8 percent, 19 percent,...

  1. Over the past four years, a stock produced returns of 6 percent, 8 percent, 19 percent, and 2 percent, respectively. Based on these four years, what range of returns would you expect to see 95 percent of the time?
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Answer #1

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The range of return that you can expect to see 95% of the time is = Mean+- (2×standard deviation)


Given:

mean = average return = 8.75%
Standard deviation= 7.27%

The range of return that you can expect to see 95% of the time is = 8.75+-(2×7.27) = -5.79% to +23.29%

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