What does a 95% confidence interval imply about a company's stock return?

The correct answer highlights that a 95% confidence interval provides a range within which we expect the true average return of the company's stock to fall, based on the sample data collected. This means that if we were to take many samples and calculate the confidence interval for each, we would expect that approximately 95% of those intervals would contain the actual average return of the stock.

This statistical concept does not guarantee that any individual return will fall within the interval, but rather that the average of all possible returns is likely to fall within that calculated range. Such a confidence level expresses a high degree of certainty based on the sample data, reflecting the precision of the estimate derived from the sample.

In contrast, the other choices do not accurately describe what a confidence interval represents or misinterpret statistical concepts. For instance, stating that there is a 50% chance of the return falling within certain values confuses the concept of probability. Defining the return as definitely falling between two specific values misrepresents the nature of confidence intervals, which allow for uncertainty. Lastly, claiming that the average return cannot exceed a specific value overlooks the inherent variability in stock returns and does not align with the concept of confidence intervals.