e. Assume there are 252 trading days in a year. What is the probability that ABC
ID: 3069335 • Letter: E
Question
e. Assume there are 252 trading days in a year. What is the probability that ABC will lose money on a given day? (Hint: Let Y be the annual return on ABC and Xi be the return on ABC on day i. Then [approximately] Y = X1 + X2 + … + X252.) (Round your answer to three decimal places.)
The answer is not 0.50 or 0.274.
Assume the annual mean return on ABC stock is around 15% and the annual standard deviation is around 25%. Assume the annual and daily returns on ABC stock are normally distributed. a. What is the probability that ABC will lose money during a year? (Round your answer to three decimal places.) 274 h. There is a 5% chance that ABC will earn a return of at least what value during a year? (Round your answer to ona decimal place.) c. r here is a 10% chance that A % vill earn a ratum ofless than ar equal to what valun dunng a year? Raund your answer to one decimal place and if your answer is negative value, enter minus sign 17 d what is the probability that ABC will earn at least 35% during a year? (Round your answer to three decimal places.) 212 e. Assume there are 252 trading days in vear what is the probability that ABC will lose money un a given day? int: Let Y be the annua return on ABC and X be the return on ABC ori day 1 Then approximately Y-X1 + X + decimal places.) + 252 Round your answer to thr 274Explanation / Answer
e)mean return on a day =15/252 =0.06
hre std error of mean =std deviation/sqrt(n)=25/sqrt(252)=1.575
therefore probabiltiy that ABC will lose money =P(X<0)=P(Z<(0-0.06)/1.575)=P(Z<-0.04)=0.484
( please try 0.485 if this comes wrong and revert)
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