Your friend is the owner of a stock which had returns of 25 percent,-36 percent,1 percent,and 16 percent for the past four years.Your friend thinks the stock may be able to achieve a return of 50 percent or more in a single year.Based on these returns,what is the probability that your friend is correct?
A)less than 0.5 percent
B)greater than 0.5 percent but less than 1.0 percent
C)greater than 1.0 percent but less than 2.5 percent
D)greater than 2.5 percent but less than 16 percent
E)greater than 16.0 percent

Question

Quizplus · Accepted Answer

Average return = (0.25 - 0.36 + 0.01 + 0.16)/4 = 0.015σ = √[1/(4 - 1)] [(0.25 - 0.015)² + (-0.36 - 0.015)² + (0.01 - 0.015)² + (0.16 - 0.015)²] = 0.2689Upper end of 68 percent range = 0.015 + (1 × 0.2689) = 28.39 percentUpper end of 95 percent range = 0.015 + (2 × 0.2689) = 55.28 percentThe probability of earning at least 50 percent in any one year is greater than 2.5 percent but less than 16 percent.

Your Friend Is the Owner of a Stock Which Had