Question
The average annual return over the past 20 years for a large cap portfolio is 13%, and the standard deviation is 5.1%. The return is
The average annual return over the past 20 years for a large cap portfolio is 13%, and the standard deviation is 5.1%. The return is normally distributed.
Based on these numbers, what is a 68% confidence interval for the next year's returns?
A. Upper bound: 26.6%; Lower bound: -4%
B. Upper bound: 21.5%; Lower bound: 1.1%
C. Upper bound: 16.4%; Lower bound: 6.2%
D. Upper bound: 27.7%; Lower bound: -17.5%
E. Upper bound: 11.3%; Lower bound: 5.1%
F. Upper bound: 22.6%; Lower bound: 10.2%
What is a 95% confidence interval for the next year's returns?
A. Upper bound: 26.6%; Lower bound: -4%
B. Upper bound: 16.4%; Lower bound: 6.2%
C. Upper bound: 11.3%; Lower bound: 5.1%
D. Upper bound: 23.6%; Lower bound: 10.2%
E. Upper bound: 21.5%; Lower bound: 1.1%
F. Upper bound: 27.7%; Lower bound: -17.5%
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