Question

Long-term corporate bond have had a historical average return of 6.4% and a standard deviation of 8.4% over this same time period. What is the range of returns that you would expect to experience 68% of the time for long-term corporate bonds?

Answer 1

Answer:

The range will be "-2.0% to 14.8%". A further explanation is given below.

Explanation:

According to the question,

For 68%, the range seems to be +/- 1 standard deviation of the mean. So that the upper as well as the lower range will be:

Upper range,

= $6.4 - 8.4$

= $-2.0$ (%)

Lower range,

= $6.4 + 8.4$

= $14.8$ (%)

So that the range would be between "-2.0% to 14.8%".