Question

You are choosing between these four investments and you want to be​ 95% certain that you do not lose more than 8.00 % on your investment. which investments could you​ choose? small stocks ​s&p 500 corporate bonds ​t-bills average return ​18.37% ​11.84% ​6.47% ​3.46% standard deviation of returns ​38.79% ​20.01% ​6.98% ​3.14% ​(select the best choice​ below.)

Answer 1

Corporate Bonds and T-Bills will have return above 8%

Step-by-step explanation:

given data

investments = 4

investment = 8 %

solution

first of all we get 95% confidence interval that is as

and here investment returns and standard deviation are attach so

95% confidence interval = Return - 2 × SD to Return + 2 × SD ................a

so here

we can see here as per table attach

here only Corporate Bonds and T-Bills will have return above 8%