I found this question while doing a practice exam and didn't understand Schweser's explanation of it.
I would be very grateful if you can make it clear to me.
Q. An investment has a mean return of 15% and a standard deviation of returns equal to 10%. If the distributions of returns is approximately normal, which of the following statements is least accurate? The probability of obtaining a return:
A. less than 5% is about 16%
B. greater than 35% is about 2.5%
C. between 5% and 25% is about 95%
Answer according to Schweser is C. Their explanation being: About 68% of all observations fall within +/- 1 standard deviation of the mean. Thus, about 68% of the values fall between 5 and 25.
I know how to calculate probability of returns greater than a certain percentage which is why i know B is right. But the rest, i couldn't figure.
I would be very grateful if you can make it clear to me.
Q. An investment has a mean return of 15% and a standard deviation of returns equal to 10%. If the distributions of returns is approximately normal, which of the following statements is least accurate? The probability of obtaining a return:
A. less than 5% is about 16%
B. greater than 35% is about 2.5%
C. between 5% and 25% is about 95%
Answer according to Schweser is C. Their explanation being: About 68% of all observations fall within +/- 1 standard deviation of the mean. Thus, about 68% of the values fall between 5 and 25.
I know how to calculate probability of returns greater than a certain percentage which is why i know B is right. But the rest, i couldn't figure.