Q:

You own a stock with an average return of 14.6 percent and a standard deviation of 21.2 percent. In any one given year, you have a 95 percent chance that you will not lose more than _____ percent nor earn more than ____ percent on this stock. g

Accepted Solution

A:
Answer:-27.8% and 57%Step-by-step explanation:Your stock with an average return of 14.6 percent Standard deviation of 21.2 percent.You have 95% probability range = 14.6% ± (2 × 21.2%)You will not lose more than = 14.6% - (2 × 21.2%)                                               = 0.146 - ( 2 × 0.212)                                               = 0.146 - 0.424                                               = -0.278 = -27.8%You will not earn more than = 14.6% + ( 2 × 21.2%)                                                = 0.146 + ( 2 × 0.212 )                                                = 0.146 + 0.424                                                = 0.57 = 57%You have a 95% chance that you will not lose more than -27.8% nor earn more than 57% on this stock.