Find the distance between the two points (-7,0) and (-9,-8)
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Answer:
There is a 95% probability that the portfolio would not loose more than 30% of its value.
Step-by-step explanation:
The confidence interval for proportions (<em>p</em>) is:
The information provided is:
For 95% confidence level the critical value of <em>z</em> is:
The 95% confidence interval for average annual return is:
The lower limit of the 95% confidence interval is -28%.
This implies that the portfolio would not loose more than 28% of its value.
Thus, there is a 95% probability that the portfolio would not loose more than 30% of its value.
In the table shown you can see the values for the function when it approaches zero, from the right and from the left. In the graph you can notice that the function tends to -1 for values close to 0 (both from the right and from the left), as might be expected from a function that cuts the "y" axis at -1.
