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Question 2: a. Suppose you observed that historically long-term corporate bonds offered an average return of 6.5 percent and an associated standard deviation of 7
Question 2: a. Suppose you observed that historically long-term corporate bonds offered an average return of 6.5 percent and an associated standard deviation of 7 percent. If you wanted to say with 95 percent confidence what the return would lie between for any randomly selected observation, what would that be? (4 points) b. Now suppose instead of long-term corporate bonds, you were to consider the same question asked about small-company stock returns. Without doing any calculations, how would the interval compare to what you computed regarding long-term corporate bonds? Provide a detailed response to why this is the case. (4 points) (Over)
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