Question

Over a particular period, an asset had an average return of 11.0 percent and a standard deviation of 19.8 percent. What range of returns would you expect to see 95 percent of the time for this asset

Answer 1

-28.6% to 50.6%

Explanation:

The computation of the range of returns is shown below:-

95% Range of Return = Average Return - 2 × Standard Deviation, Average Return + 2 × Standard Deviation

= 11.0% - 2 × 19.8%, 11.0% + 2 × 19.8%

95% Range of Return = -28.6%, 50.6%

The Expected range of returns is

= -28.6% to 50.6%

Therefore for computing the expected range of returns we simply applied the above formula.