Assume that the standard deviation of daily returns for Marcus, Inc. stock in a recent period is 1.5 percent. Furthermore, a 95 percent confidence interval is desired for the maximum loss. Daily returns are normally distributed, and the expected daily return is 0.05 percent. What is the lower boundary of the maximum expected loss

= - 2.43%

Step-by-step explanation:

From the information given:

Since the variable (daily returns) is normally distributed, Then, using empirical rule at 95% confidence interval level, we have:

where;

The expected mean daily return

The standard deviation

Given that the 95% confidence interval is expected to be a maximum loss, then the probability is left-tailed which is 1.65 away from the average.

Thus the distribution of the lower boundary can be computed as:

=

=

=

= - 2.43%

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