# Fight Finance

#### CoursesTagsRandomAllRecentScores

 Scores keithphw $6,001.61 Carolll$1,373.33 Visitor $1,258.61 cuiting$1,229.70 Jade $1,135.80 Skywalke...$1,070.00 mm11 $1,050.33 Zin$1,049.09 ninalee $1,039.70 Visitor$1,024.70 Visitor $1,005.61 Visitor$950.00 Doris $889.70 Visitor$840.00 Emma Lu $810.00 trungbin$803.09 victor $784.70 alison$771.70 Visitor $760.00 Chloe_$724.05

Fred owns some BHP shares. He has calculated BHP’s monthly returns for each month in the past 30 years using this formula:

$$r_\text{t monthly}=\ln⁡ \left( \dfrac{P_t}{P_{t-1}} \right)$$

He then took the arithmetic average and found it to be 0.8% per month using this formula:

$$\bar{r}_\text{monthly}= \dfrac{ \displaystyle\sum\limits_{t=1}^T{\left( r_\text{t monthly} \right)} }{T} =0.008=0.8\% \text{ per month}$$

He also found the standard deviation of these monthly returns which was 15% per month:

$$\sigma_\text{monthly} = \dfrac{ \displaystyle\sum\limits_{t=1}^T{\left( \left( r_\text{t monthly} - \bar{r}_\text{monthly} \right)^2 \right)} }{T} =0.15=15\%\text{ per month}$$

Assume that the past historical average return is the true population average of future expected returns and the stock's returns calculated above $(r_\text{t monthly})$ are normally distributed. Which of the below statements about Fred’s BHP shares is NOT correct?