The S&P 500 index mean yearly return is 9.42% and the standard deviation of the yearly...

 

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The S&P 500 index mean yearly return is 9.42% and the standard deviation of the yearly return is 19.74%. On October 19, 1987, the S&P 500 index dropped more than 20%. How many standard deviations is -20% one day return away from the mean? It locates at 19 (rounding your answer to the integer) Hint: you need to convert the mean and the std of the yearly returns to daily measurement by daily= r yearly/365; Stddaily= Stdyearly/sqrt(365) standard deviations below the mean return Based on your calculations for previous question. Which of the following descriptions is correct? Select one: The return distribution of S&P 500 is normal. The return distribution of S&P 500 skewed to the right. The return distribution of S&P 500 has long tail on the left. The return distribution of S&P 500 has fat tails on both sides. The S&P 500 index mean yearly return is 9.42% and the standard deviation of the yearly return is 19.74%. On October 19, 1987, the S&P 500 index dropped more than 20%. How many standard deviations is -20% one day return away from the mean? It locates at 19 (rounding your answer to the integer) Hint: you need to convert the mean and the std of the yearly returns to daily measurement by daily= r yearly/365; Stddaily= Stdyearly/sqrt(365) standard deviations below the mean return Based on your calculations for previous question. Which of the following descriptions is correct? Select one: The return distribution of S&P 500 is normal. The return distribution of S&P 500 skewed to the right. The return distribution of S&P 500 has long tail on the left. The return distribution of S&P 500 has fat tails on both sides.

Answer rating: 100% (QA)

ANSWER A The return distribution of SP 500 is normal If the SP 500 is normally distributed and resem... View the full answer