Suppose the average return on Asset A is 6.4 percent and the standard deviation

Question

Suppose the average return on Asset A is 6.4 percent and the standard deviation is 7.6 percent and the average return and standard deviation on Asset B are 3.5 percent and 3.0 percent, respectively. Further assume that the returns are normally distributed. Use the NORMDIST function in Excel to answer the following questions.

What is the probability that in any given year, the return on Asset A will be greater than 9 percent? Less than 0 percent? (Round your answers to 2 decimal places. (e.g., 32.16))

What is the probability that in any given year, the return on Asset B will be greater than 9 percent? Less than 0 percent? (Round your answers to 2 decimal places. (e.g., 32.16))

In 1979, the return on Asset A was ?4.31 percent. How likely is it that such a low return will recur at some point in the future? (Round your answer to 2 decimal places. (e.g., 32.16))

Asset B had a return of 10.20 percent in this same year. How likely is it that such a high return on T -bills will recur at some point in the future?(Round your answer to 2 decimal places. (e.g., 32.16))

Suppose the average return on Asset A is 6.4 percent and the standard deviation is 7.6 percent and the average return and standard deviation on Asset B are 3.5 percent and 3.0 percent, respectively. Further assume that the returns are normally distributed. Use the NORMDIST function in Excel to answer the following questions.

Suppose the average return on Asset A is 6.4 percent and the standard deviation is 7.6 percent and the average return and standard deviation on Asset B are 3.5 percent and 3.0 percent, respectively. Further assume that the returns are normally distributed. Use the NORMDIST function in Excel® to answer the following questions. What is the probability that in any given year, the return on Asset A will be greater than 9 percent? Less than 0 percent? (Round your answers to 2 decimal places. (e.g., 32.16)) What is the probability that in any given year, the return on Asset B will be greater than 9 percent? Less than 0 percent? (Round your answers to 2 decimal places. (e.g., 32.16)) In 1979, the return on Asset A was ?4.31 percent. How likely is it that such a low return will recur at some point in the future? (Round your answer to 2 decimal places. (e.g., 32.16)) Asset B had a return of 10.20 percent in this same year. How likely is it that such a high return on T -bills will recur at some point in the future?(Round your answer to 2 decimal places. (e.g., 32.16))

Explanation / Answer

Formula: Probability (X <= x)= phi ((mean-X)/std. dev)

Hence the answers in order are:

36.61%,

19.99%,

3.34%,

12.17%,

7.94%,

1.28%

respectively

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