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Nina [5.8K]
3 years ago
8

The Ishares Bond Index fund (TLT) has a mean (average) and annual standard deviation of realized returns of 6% and 10%, respecti

vely. If these are unbiased estimators of expected returns and future volatility, answer the following. (Round your answers to the nearest integer.)
(a) What is the 68% confidence interval for the returns on TLT next year (as a percent)? %to %

(b) What is the 95% confidence interval for the returns on TLT next year (as a percent)?

(c) What is the 99.7% confidence interval for the returns on TLT next year (as a percent)? % to %
Business
1 answer:
Aliun [14]3 years ago
8 0

Answer:

<em>(A). Law of 68 per cent </em>

range = mean + /- 1(standard deviation)

= 9 + / -1(10)

= 9 - 1(10) to 9 + 1(10)

= -1 to 19

<em>(B). Law of 95 per cent </em>

range = mean +/- 1.96(standard deviation)

= 9 +/- 1.96(10)

= 9 - 1.96(10) to 9 + 1.96(10)

<em>= -10.6 to 28.6</em>

<em>(C). Law of 99 per cent </em>

range = mean +/- 3(standard deviation)

=9 +/- 310()

=9 - 3(10) to 9 + 3(10)

<em>= -21 to 39</em>

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