The actual return through continuously compounded annual return on a stock which is normally distributed with certain confidence level. Introduction: The confidence interval states the probability or range of values of the population parameters which will lie between two set values for a certain proportion of time.

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Answer 1

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Features Features Normal distribution is characterized by two parameters, mean (µ) and standard deviation (σ). When graphed, the mean represents the center of the bell curve and the graph is perfectly symmetric about the center. The mean, median, and mode are all equal for a normal distribution. The standard deviation measures the data's spread from the center. The higher the standard deviation, the more the data is spread out and the flatter the bell curve looks. Variance is another commonly used measure of the spread of the distribution and is equal to the square of the standard deviation.

Chapter 5, Problem 10PS

Summary Introduction

To calculate: The actual return through continuously compounded annual return on a stock which is normally distributed with certain confidence level.

Introduction: The confidence interval states the probability or range of values of the population parameters which will lie between two set values for a certain proportion of time.

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Students have asked these similar questions

The continuously compounded annual return on a stock is normally distributed with a mean of 28% and standard deviation of 30%. With 95.44% confidence, we should expect its actual return in any particular year to be between which pair of values? Hint: Refer to Figure. multiple choice A. −32.0% and 88.0% B. −20.0% and 88.0% C. −62.0% and 118.0% D. −2.0% and 58.0%

Suppose the returns on a small stock are normally distributed. The historical average return is 18 percent, and the standard deviation is 6 percent. What is the probability that your return on this stock will be no less than 12 percent in a given year? What range of returns would you expect to see 95 percent of the time? What range would you expect to see 99 percent of the time?

The rate of return on General Electric common stock over the coming year is normally distributed with an expected value of 15 percent and a standard deviation of 12 percent. Determine the probability of earning a negative rate of return.

Answer 2

Question

Features Features Normal distribution is characterized by two parameters, mean (µ) and standard deviation (σ). When graphed, the mean represents the center of the bell curve and the graph is perfectly symmetric about the center. The mean, median, and mode are all equal for a normal distribution. The standard deviation measures the data's spread from the center. The higher the standard deviation, the more the data is spread out and the flatter the bell curve looks. Variance is another commonly used measure of the spread of the distribution and is equal to the square of the standard deviation.

Chapter 5, Problem 10PS

Summary Introduction

To calculate: The actual return through continuously compounded annual return on a stock which is normally distributed with certain confidence level.

Introduction: The confidence interval states the probability or range of values of the population parameters which will lie between two set values for a certain proportion of time.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 3

Question

Features Features Normal distribution is characterized by two parameters, mean (µ) and standard deviation (σ). When graphed, the mean represents the center of the bell curve and the graph is perfectly symmetric about the center. The mean, median, and mode are all equal for a normal distribution. The standard deviation measures the data's spread from the center. The higher the standard deviation, the more the data is spread out and the flatter the bell curve looks. Variance is another commonly used measure of the spread of the distribution and is equal to the square of the standard deviation.

Chapter 5, Problem 10PS

Summary Introduction

To calculate: The actual return through continuously compounded annual return on a stock which is normally distributed with certain confidence level.

Introduction: The confidence interval states the probability or range of values of the population parameters which will lie between two set values for a certain proportion of time.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Features Features Normal distribution is characterized by two parameters, mean (µ) and standard deviation (σ). When graphed, the mean represents the center of the bell curve and the graph is perfectly symmetric about the center. The mean, median, and mode are all equal for a normal distribution. The standard deviation measures the data's spread from the center. The higher the standard deviation, the more the data is spread out and the flatter the bell curve looks. Variance is another commonly used measure of the spread of the distribution and is equal to the square of the standard deviation.

Chapter 5, Problem 10PS

Summary Introduction