If the arithmetic mean of a sample stock returns for a number of years is 6.2% and the standard deviation of that sample return is 8.7%, what is the range of the return of this stock?
What is the calculation I use to determine the range of the return of this stock?© BrainMass Inc. brainmass.com June 3, 2020, 9:47 pm ad1c9bdddf
The range can be determined by using the empirical rule (68-95-99.7) which states that 68% of all possible returns would fall within 1 standard deviation, 95% of all possible returns would fall within 2 standard deviations, and 99.7% of all possible returns will fall within 3 standard deviations. I know this doesn't ...
The solution outlines how to arrive at the range of possible returns for a stock given several variables.