Question

What is the probability that small-company stocks will produce an annual return that is more than one standard deviation below the average? C) 5.0 percent D) 16 percent E) 32 percent B) 2.5 percent A) 1.0 percent

Answer 1

Answer:

16%

Explanation:

To answer this question, we make reference to the standard normal distribution curve and the z-scores value

For 68% confidence interval, the value of z will return a value of 1 SD

Hence, the Probability that the company stocks will produce an annual return that is more than one standard deviation is calculated below:

Probability = (1 - 68%) / 2

= 32%/2 = 16%