If returns of S&P 500 stocks are normally distributed, what range of returns would you expect to see 95% of the time? Ba

Question

3 years ago

9

If returns of S&P 500 stocks are normally distributed, what range of returns would you expect to see 95% of the time? Ba

se your answer on the information below. Small Stocks S&P 500 Corporate Bonds T-Bills Average Return 18.83% 11.44% 6.81% 3.84% Standard Deviation of returns 38.81% 20.07% 6.69% 3.25%

Business

1 answer:

kumpel [21] · Answer 1 · 2022-08-13T07:34:38+03:00

Answer: Between -28.7% and 51.58%

Explanation:

95% of the time would mean a 95% interval which would mean that it is between -2 and +2 standard deviation as it is Normally distributed.

We can therefore use the following formula to find the confidence interval,

= Average return + (2 * standard deviation) and,

= Average - return (2 * standard deviation)

= 11.44% + (2*20.07%)

= 0.5158

= 51.58%

and

= 11.44% - (2*20.07%)

= -0.287

= -28.7%

Between -28.7% and 51.58% is the range of returns expected to be seen 95% of the time.

If you need any clarification please feel free to react or comment.

If returns of​ S&P 500 stocks are normally​ distributed, what range of returns would you expect to see​ 95% of the​ time? Ba

If returns of S&P 500 stocks are normally distributed, what range of returns would you expect to see 95% of the time? Ba