Final answer:
To find the confidence intervals for a stock's expected return, the standard deviation and the Z-scores for the desired confidence levels are used. The calculations involve adding and subtracting the product of the standard deviation and respective Z-score from the expected return.
Step-by-step explanation:
To calculate the confidence intervals for the given stock's expected return, we use the standard deviation and the Z-scores associated with the desired confidence levels. The stock has an expected return of 7.08% and a standard deviation of 15.28%. Here's how we determine the ranges:
- 68% Confidence Interval: The Z-score for 68% confidence is approximately 1 (one standard deviation from the mean on both sides). Thus, the upper range is 7.08% + (1 × 15.28%) and the lower range is 7.08% - (1 × 15.28%).
- 95% Confidence Interval: The Z-score for 95% confidence is approximately 1.96. The upper range is 7.08% + (1.96 × 15.28%) and the lower range is 7.08% - (1.96 × 15.28%).
- 99% Confidence Interval: The Z-score for 99% confidence is approximately 2.58. The upper range is 7.08% + (2.58 × 15.28%) and the lower range is 7.08% - (2.58 × 15.28%).
To provide exact answers, one would need to perform the arithmetic to calculate each interval range. Don't forget to express these as percentages, just like the mean and standard deviation were originally given.
For example, for the 68% confidence interval, the calculations would be:
- Upper Range: 7.08% + (1 × 15.28%) = 22.36%
- Lower Range: 7.08% - (1 × 15.28%) = -8.20%
And similarly, for the 95% and 99% confidence intervals.