Problem 10-17 Return Distributions [LO 3] Series Average return What range of re
ID: 2767364 • Letter: P
Question
Problem 10-17 Return Distributions [LO 3]
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
Solution for both :
Given the mean of the return 6.9%
The range of returns you would expect to see 95% level is the mean plus or minus 2 standard
R ± 2 = 6.9% ± 2(9.5%) = –12.10% to 25.90%
The range of returns you would expect to see 99 percent of the time is the mean plus or minus 3 standard deviations,
99% level: R ± 3 = 6.9% ± 3(9.9%) = –22.80% to 36.60%
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