Question: The countries of Stabilato and Variato have the following average returns and standard deviations for their stocks, bond, and short-term government securities. What range of returns should you expect to earn 95 percent of the time for each asset class if you invested in Stabilato’s securities? From investing in Variato’s securities?
Stabilato Average Standard
Asset Return Deviation

Stocks 8% 3%
Bonds 5% 2%
Short-term government debt 3% 1%


Variato Average Standard
Asset Return Deviation

Stocks 15% 13%
Bonds 10% 8%
Short-term government debt 6% 3%  Edit