68% represents the percentage of possible annual returns that will fall within one standard deviation on either side of the mean. In other words, Wealth Managers can expect with 68% confidence that its actual annual return on its investment in Muggy-Day Industries will fall within one standard deviation below and one standard deviation above the mean return.
The expected annual return is the mean of the normal distribution of all possible annual investment returns. That is at the highest point on a graph of a normal, bell-shaped distribution. On this graph, the expected annual return is 4%.
34% represents the percentage of possible annual returns that will fall within one standard deviation on either side of the mean. In other words, Wealth Managers can expect with 34% confidence that its actual annual return on its investment in Muggy-Day Industries will fall within one standard deviation below the mean return. It can also expect with 34% confidence that its actual annual return on its investment in Muggy-Day Industries will fall within one standard deviation above the mean return.
9.14% represents a possible actual annual return, but it is not the expected annual return. In fact, 9.14% would be a very improbable annual return, according to this distribution. According to this distribution, 99.5% of all possible annual returns will be below 9.14%. Thus, there is a probability of only 0.5% that the actual annual return will be 9.14% or above.
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What is Wealth Managers' expected annual return on its investment in Muggy-Day Industries?