The average annual return over the period 1926-2009 for the S&P 500 is
11.511.5%,
and the standard deviation of returns is
20.1 %20.1%.
Based on these numbers, what is a 95% confidence interval for 2010 returns?
A.
negative 1.4−1.4%,
20.720.7%
B.
negative 28.7−28.7%,
72.472.4%
C.
negative 28.7−28.7%,
51.751.7%
D.
negative 10−10%,
3131%
95% confidence interval for 2010 returns = Mean - (2 * standard deviation) to Mean + (2 * standard deviation)
= 11.5% - (2 * 20.1%) to 11.5% + (2 * 20.1%)
= (11.5% - 40.2%) to (11.5% + 40.2%)
= -28.7% to 51.7%
95% confidence interval for 2010 returns = -28.7% to
51.7%
Correct answer is option C.
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The average annual return over the period 1926-2009 for the S&P 500 is 11.511.5%, and the...
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