Question

You observe a portfolio for five years and determine that its average return is 11.8​%

and the standard deviation of its returns in 19.8​%.

Would a​ 30% loss next year be outside the​ 95% confidence interval for this​ portfolio?

The low end of the​ 95% prediction interval is _____% ​(Enter your response as a percent rounded to one decimal​ place.)

​(Enter your response as a percent rounded to one decimal​ place.)

A.​Yes, you can be confident that the portfolio will not lose more than​ 30% of its value next year. This is because the low end of the prediction interval is less than

minus−​30%.

B.​No, you cannot be confident that the portfolio will not lose more than​ 30% of its value next year. This is because the low end of the prediction interval is less than

minus−​30%.

C.​Yes, you can be confident that the portfolio will not lose more than​ 30% of its value next year. This is because the low end of the prediction interval is greater than

minus−​30%.

D.​No, you cannot be confident that the portfolio will not lose more than​ 30% of its value next year. This is because the low end of the prediction interval is greater than

minus−​30%.

Answer 1