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Standard Deviation and Investment

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Please solve with the following problem. Provide step by step calculations with explanations.

John is investing in the S&P 500. His expected return on the S&P 500 is 10% with a standard deviation of 4%. If John is investing $200,000, then what is the dollar range of returns that John can have with 90 percent confidence at the end of the year?

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Solution Summary

This solution helps with a problem involving standard deviation and investment. It helps find the dollar range of returns a person who is investing in a stock recieves at the 90 percent confidence interval at the end of the year, given standard deviation and expected return. Step by step calculations are given along with explanations of each step. The explanation is given in 226 words.

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Problem: John is investing in the S&P 500. His expected return on the S&P 500 is 10% with a standard deviation of 4%. If John is investing $200,000, then what is the dollar range of returns that John can have with 90 percent confidence at the end of the year?

Solution:
We assume that the stock return ...

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