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liubo4ka [24]
3 years ago
5

An asset has an average return of 11.57 percent and a standard deviation of 24.54 percent. What is the most you should expect to

lose in any given year with a probability of 2.5 percent?
Business
1 answer:
forsale [732]3 years ago
3 0

Answer:

-37.51

Explanation:

Confidence interval = 1 - Probability * 2

= 1 - 0.025*2

= 0.95

= 95%

As per 95% rule , range = mean +/- 2 * Standard deviation

= 11.57 +/- 2 * 24.54

= 11.57 - 2 * 24.54 to 11.57 + 2 * 24.54

= 11.57 - 49.08 to 11.57 + 49.08

= -37.51 to 60.65

Conclusion: -37.51 is the lower bound hence it is the max one can expect to lose in any given year.

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