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Consider the following realized annual returns: Year End Market Realized Return Microsoft Realized Return 1996 21.2% 88.3% 1997 30.3% 56.4% 1998 22.3% 114.6% 1999 25.3%

Consider the following realized annual returns:

Year End

Market Realized Return

Microsoft Realized Return

1996

21.2%

88.3%

1997

30.3%

56.4%

1998

22.3%

114.6%

1999

25.3%

68.4%

2000

-11.0%

-62.8%

2001

-11.3%

52.7%

2002

-20.8%

-22.0%

2003

33.1%

6.9%

2004

13.0%

9.2%

2005

7.3%

-0.9%

Suppose that you want to use the 10 year historical average return on Microsoft to forecast the expected future return on Microsoft.

Required: Calculate the 95% confidence interval for your estimate of the expected return.

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