Question

If returns of​ S&P 500 stocks are normally​ distributed, what range of returns would you expect to see​ 95% of the​ time? Base your answer on the information below. 19.72%

Answer 1

Answer: -29.75% to 52.33%

Explanation:

Given the Average return and the standard deviation, the range that is to be expected 95% of the time can be calculated by;

Upper bound = Average + (2 * standard deviation)

Lower Bound = Average - (2 * standard deviation)

Upper bound = 11.29% + (2 * 20.52%)

= 11.29% + 41.04%

= 52.33%

Lower bound = 11.29% - (2 * 20.52%)

= 11.29% - 41.04%

= -29.75%

The range is, -29.75% to 52.33%