A stock had returns of 8%,39%,11%,and -24% for the past four years. Which one of the following best describes the probability that this stock will NOT lose more than 43% in any one given year?
A) 84.0%
B) 95.0%
C) 97.5%
D) 99.0%
E) 99.5%

Question

Quizplus · Accepted Answer

The probability that the stock will not lose more than 43% in any given year is 97.5%, assuming a normal distribution of returns. This is because a 43% loss is more than two standard deviations away from the mean in a normal distribution, which corresponds to a 97.5% probability of not exceeding this loss.

A Stock Had Returns of 8%,39%,11%,and -24% for the Past