Do h mathxl.com Homework: Chapter 11 Homework Score: 0 of 1 pt P 11-20 (similar

Question

Do h mathxl.com Homework: Chapter 11 Homework Score: 0 of 1 pt P 11-20 (similar to) Since the low end of the 96%prediction interval isL % Enter your response as a percentrounded to onedeoma,place O A. Yes, you can be confident that the portfolio want lose more than 30% of its value neod year This is because he low end ofthe predction interval is lessthan-30% OC. No, you cannot be confident that the portfolio wil not lose more than 30% ofits value next year This is because the low endofte o, Yas you can be confident that the pedale w. not lose more than 30% ed its value next year This is because the low end ofthe predetion intervalisg eitan -30%

Explanation / Answer

Since the low end of the 95% prediction interval is 28.6%

A.Yes. you can be confident that the portfoio will not loss more than 30% of value next year. This is because the low end of prediction interval level is less than - 30%

Working notes:-

95% of the returns will be between -28.60 (11.7% - 2*19.30) and 50.30% (11.70% + 2*19.30%)

At 95% confidence level = Two standard deviations i.e., mean +/- 2*standard deviations.

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