Problem 13-14 A stock has an annual return of 11.2 percent and a standard deviat

Question

Problem 13-14

A stock has an annual return of 11.2 percent and a standard deviation of 48 percent. What is the smallest expected gain over the next year with a probability of 2.5 percent? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)

A stock has an annual return of 11.2 percent and a standard deviation of 48 percent. What is the smallest expected gain over the next year with a probability of 2.5 percent? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)

Explanation / Answer

Smallest expected gain = 11.2% - 1.96 * 0.48 [1.96 times pertains to 2.5% of probability]

= 10.26%

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