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suppose you own a portfolio o stocks and bonds with an expected rate of return of 4%, and an standard deviation(measure of risk) of 6%.
suppose you own a portfolio o stocks and bonds with an expected rate of return of 4%, and an standard deviation(measure of risk) of 6%. a normal random variable, such as a portfolio's return, stays within two standard deviations of its average approximately 95% of the time.
Given this information, you expect that typically (about 95% of the time), you could experience gains well above 4%, but you could also experience a lost as large as ?
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