There is a 68% chance that the stock returns will be within one standard deviation of the mean i.e. with 68% chance, the stock returns will be between 7% and 21%. Hence, the probability that stock returns will lie outside this range is 100% - 68% = 32%. Since the normal distribution is symmetrically distributed about the mean, the probability that the returns will be less than 7% equals 32/2
= 16% Instead of the above, you could also solve the problem using the z-score and the normal probability distribution table. You should, however, be aware of short-cuts like the above.

The 95% confidence interval corresponds to a multiple of 1.96 for standard deviation. Thus, the range or interval is 25% +- 1.96 x 33% = [-39.68, 89.68].

Short sellers DO NOT get the proceeds of the short sell.