Question

Long-term corporate bond have had a historical average return of 6.4% and a standard deviation of 8.4% over this same time period. What is the range of returns that you would expect to experience 68% of the time for long-term corporate bonds?

Answer 1

The range will be "-2.0% to 14.8%". A further explanation is given below.

Step-by-step explanation:

According to the question,

For 68%, the range seems to be +/- 1 standard deviation of the mean. So that the upper as well as the lower range will be:

Upper range,

=
`6.4 - 8.4`

=
`-2.0` (%)

Lower range,

=
`6.4 + 8.4`

=
`14.8` (%)

So that the range would be between "-2.0% to 14.8%".