Firms in the market that have similar levels of risk

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Excess returns for stocks are determined by finding the difference between the return for a stock and the returns for firms in the market that have similar levels of risk. Suppose stocks listed on an exchange have a mean monthly excess return of 0.005 and a standard deviation of 0.004 and monthly excess returns are normally distributed. Show that if data are mound shaped approximately 68% of them are within one standard deviation from the mean.

Reference no: EM132121358

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