Answer: 1.9% to 7.5%.

### Explanation To determine the 95% prediction interval for the stock's monthly return, follow these steps: 1. **Calculate the predicted value of the dependent variable (Yf):** The predicted value is derived using the estimated intercept (b0) and slope (b1) of the regression model, along with the forecasted value of the independent variable (Xf). \[ Yf = b0 + b1 \times Xf \] Substituting the given values: \[ Yf = 1.2\% + 1.0 \times 3.5\% = 4.7\% \] 2. **Construct the prediction interval:** The prediction interval accounts for the uncertainty in the forecast and is calculated as: \[ Yf \pm (t_{\text{critical}} \times S_f) \] Where: - \( t_{\text{critical}} \) is the critical t-value (±2.032 for a 5% significance level). - \( S_f \) is the standard error of the forecast (1.4%). Substituting the values: \[ 4.7\% \pm (2.032 \times 1.4\%) = 4.7\% \pm 2.8448\% \] This results in the interval: \[ (1.8552\%, 7.5448\%) \] Rounded to one decimal place, the interval is approximately **1.9% to 7.5%**. **Why Option B is Correct:** - It correctly incorporates the predicted value of the dependent variable and the critical t-values to construct the prediction interval. **Why Option A is Incorrect:** - It mistakenly uses the forecasted value of the independent variable (3.5%) directly, leading to an incorrect interval. **Why Option C is Incorrect:** - It neglects the critical t-values, resulting in an overly narrow interval.

Author: LeetQuiz Editorial Team