Series Average return What range of returns would you expect to see 95 percent o

ID: 2715162 • Letter: S

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Series

Average return

What range of returns would you expect to see 95 percent of the time for long-term corporate bonds? (Negative amount should be indicated by a minus sign. Input your answers from lowest to highest to receive credit for your answers. Do not round intermediate calculations. Enter your answers as a percentage rounded to 2 decimal places (e.g., 32.16).)

What about 99 percent of the time? (Negative amount should be indicated by a minus sign. Input your answers from lowest to highest to receive credit for your answers. Do not round intermediate calculations. Enter your answers as a percentage rounded to 2 decimal places (e.g., 32.16).)

Consider the following table for the total annual returns for a given period of time.

Explanation / Answer

For long-term corporate bonds,

Average return = 6.3%

Standard deviation = 9.6%

Requirement 1:

Range of returns at 95% confidence = (Average return - 1.96 * Standard deviation) to (Average return + 1.96 * Standard deviation)

= (6.3% - 1.96 * 9.6%) to (6.3% + 1.96 * 9.6%)

= -12.52% to 25.12%

Requirement 2:

Range of returns at 99% confidence = (Average return - 2.576 * Standard deviation) to (Average return + 2.576 * Standard deviation)

= (6.3% - 2.576 * 9.6%) to (6.3% + 2.576 * 9.6%)

= -18.43% to 31.03%

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Series Average return What range of returns would you expect to see 68 percent o

Series Average return What range of returns would you expect to see 95 percent o

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Series Average return What range of returns would you expect to see 95 percent o

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