Computation of next year stock return

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Reference no: EM1356912

Use the following historical data over the 1926-2000 period to answer the following question.

Asset Average Return Standard Deviation
Large-company stocks 13.0% 20.2%
Small-company stocks 17.3% 33.4%
Long term government bonds 5.7% 9.4%
Us Treasury Bills 3.9% 3.2%

If the returns on large company stocks are normally distributed, for which of the following returns can you not state, with 95% confidence that next years stock return might be equal to? Show your work.

a. -30.4%
b. -25.6%
c. 20.3%
d. 33.5%
e. 52.0%

Reference no: EM1356912

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