Calculate

the mean and standard deviation of the following securities’ returns:

Year |
Computroids Inc. |
Blazers Inc. |

1 |
10% |
5% |

2 |
5% |
6% |

3 |
–3% |
7% |

4 |
12% |
8% |

5 |
10% |
9% |

B. Assuming

these observations are drawn from a normally distributed probability space, we

know that about 68% of values drawn from a normal distribution are within one

standard deviation away from the mean or expected return; about 95% of the

values are within two standard deviations; and about 99.7% lie within three

standard deviations.

Using your calculations from part A, calculate the 68%, 95%, and 99% confidence

intervals for the two stocks. To calculate the 68%, you would calculate the top

of the confidence interval range by adding one standard deviation to the

expected return, and calculate the bottom of the confidence interval by

subtracting one standard deviation from the expected return. For 95%, use two

standard deviations, and for 99%, use three.

Your answer should show three ranges from the bottom of the confidence interval

to the top of the confidence interval.