CFA Practice Question

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CFA Practice Question

An investor estimated the mean return of a portfolio at 12% and the standard deviation at 16%. What is the 95% confidence interval for the mean return on this portfolio?

A. [-19.36%, 43.36%]
B. [-14.32%, 18.32%]
C. [-5.42%, 18.58%]
Correct Answer: A

The relevant confidence interval is given by X-bar +- 1.96 x 16.

User Contributed Comments 6

User Comment
kamin return 12+-1.96*16
pisanc06 Dont forget to put the order of operations in the equation! 12 + or - the product of(1.96*16)
bidisha I dont get this q
davcer bidisha, with 95% of confidence you get a Z of 1.96, so your range is mean+/- std dv(Z)
lordcomas Where do you get the -19.36% from? I totally get the 43.36% but not the other result, can someone please explain? thanks.
jimmyvo 12 + 1.96 * 16; and
12 - 1.96 * 16

Do multiplication first. Order of operations applies.
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