The 68 percent probability range for any one given year is 22.08% , -16.08%.
First step
Average return= (0.03+ 0.18- 0.24)/3
Average return=0.03
Second step
ó= (0.03-0.03)^2 + (0.18-0.03)^2 + (-0.24-0.03)^2
= 0+0.0225+0.0729
=0.0954
Third step
Probability=.03+2(.0954)=22.08%
Probability=.03-2(.0954)= -16.08%
Therefore the 68 percent probability range for any one given year is 22.08% , -16.08%.
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The 68% probability range for any given year would be 22.08% , -16.08%.
Probability indicates how likely an event is to occur in the form of a percentage and how that proposition is true.
The probability range would be calculated as follow-
Average rate of return(X) = Total rate of return/Number of years
= [3%+ 8% +(- 24%)/3
= 0.03%
Deviation(σ) = (0.03-0.03)^2 + (0.18-0.03)^2 + (-0.24-0.03)^2
= 0+0.0225+0.0729
= 0.0954
Then, the 68% Probability range would be = .03+2(.0954)=22.08%
Probability would be = .03-2(.0954)= -16.08%
Hence, the 68% probability range would be 22.08% to -16.08%.
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