A security with normally distributed returns has an annual expected return of 18% and standard deviation of 23%. The probability of getting a return between -28% and 64% in any one year is ________.
A) 68.26%
B) 95.44%
C) 99.74%
D) 100%

Question

Quizplus · Accepted Answer

Note that the expected return minus 2 standard deviations is 18% - (2 × 23%) = -28% and the expected return plus 2 standard deviations is 18% + (2 × 23%) = 64%. The probability of a return falling within ± 2 standard deviations is 95.44%.

A Security with Normally Distributed Returns Has an Annual Expected