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Please help me with this, I keep getting it wrong. sume that historical returns and future returns are independently and identically distributed and drawn from
Please help me with this, I keep getting it wrong.
sume that historical returns and future returns are independently and identically distributed and drawn from the same distribution a. Calculate the 95% confidence intervals for the expected annual return of four different investments included in the tables EEE (the time period spans 89 years) b. Assume that the values in the tables are the true expected return and volatility (i.e., estimated without error and that these returns are normally distributed. For each investment, calculate the probability that an investor will not lose more than 3% in the next year. (Hint. For each inbestment, you can use the function normdist(x,mean, volatility,1) in Excel to compute the probability that a normally distributed variable with a given mean and volatility will exceed x where x in this case is 3%. Then subtract that probability from 100% to find the probability that an investor will not lose more than 3%.) c. Do all the probabilities you calculated in part b) make sense? If so, explain. If not, can you identify the reason? a. Calculate the 95% confidence intervals for the expected annual return of four different investments included in the tables EEa (the dates are inclusive, so the time period spans 89 years). Upper Bound Lower Bound Confidence interval for small stocks is (Round to two decimal places.) Lower Bound Upper Bound Confidence interval for S&P 500 is (Round to two decimal places.) Lower Bound Upper Bound Confidence interval for corporate bonds is (Round to two decimal places.) Upper Bound Lower Bound Confidence interval for Treasury bills is (Round to two decimal places b. Assume that the values in the tables are the true expected return and volatility (i.e., estimated without error and that these returns are normally distributed. For each investment, calculate the probability that an investor will not lose more than 3% in the next year. (Hint: For each inbestment, you can use the functionStep by Step Solution
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