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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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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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%

The next year's return on stock X is expected to be either -7% with probability 0.2 or 20% with probability 0.8. Find the stnadard deviation of the returns. a.12.37% b.11.10% c.12.88% d.11.69% e.10.80%

Suppose that the annual return for particular stock follows the same distribution every year, and that the return for any given year is independent of the returns for any prior years. Based on an analysis of the stock's annual returns over an 12 year period, it is determined that the 95% confidence interval for the stock's expected annual return is given by (-0.1724, 0.2861). Find the volatility of the stock. Use the approximation formula from Berk and DeMarzo. 38.52% 40.90% 42.09% 37.32% 39.71%

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