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**CFA Practice Question**

An elderly couple invested in a conservative balanced fund is interested in knowing the range of possible returns. The balanced fund strategy in question has expected annual return of 5% with a standard deviation of 1%. The returns are thought to be normally distributed. What is the 99% confidence interval?

A. [2.73%, 7.28%].

B. [2.53%, 7.48%].

C. [2.43%, 7.58%].

**Explanation:**The 99% confidence interval will be 5% - 2.575(1%) to 5% + 2.575(1%) = [2.43%, 7.58%].

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**User Contributed Comments**
5

User |
Comment |
---|---|

shasha |
1% is the standard error, not standard deviation. |

lwang014 |
we use the standare error to calculate the CI |

chandsingh |
How do we compute standard error without knowing sample size? isnt the calc sd/sqr of N |

Jaro_S |
n=1? |

6004895 |
99% should give a wider spread? coz its the last of the con interval. am I right? |