Explain what is normal probability distribution

Assignment Help Financial Management
Reference no: EM131558923

Please explain what is a normal probability distribution, and what it means to “assume” that stock returns are roughly normally distributed. Do you think it happens in real life? Please explain.

Now Suppose you have invested in a stock for the last 10 years. Would you use arithmetic or geometric average to assess the performance of your investment? Why?

Reference no: EM131558923

Questions Cloud

Describe the five needs in maslows hierarchy : Describe the five needs in Maslow's hierarchy. Illustrate each one with a concrete example of how a student might behave
Share trades at price-to-book ratio : A share trades at a price-to-book ratio of 0.8. Explain whether his recommendation agrees with his forecast.
Difference between individual and social constructivism : xplain the difference between individual constructivism and social constructivism. Describe two teaching strategies consistent with each perspective
Does globalization improve the lives of people : Present three major viewpoints on the future of international business and globalization. The viewpoints are reflected in the Cavusgil, Knight.
Explain what is normal probability distribution : Please explain what is a normal probability distribution, and what it means to “assume” that stock returns are roughly normally distributed.
Assets likely has the highest level of risk : Which of the following assets likely has the highest level of risk (therefore the highest expected return)?
How would you define abnormal behavior : How would you define "abnormal behavior"? Which of the three qualities discussed in your text----deviation from the norm
What is the net present worth of the system : The system will save $5236 per year because of efficiencies. Ms. Child uses a MARR of 8% to evaluate investments. What is the net present worth of the system?
What symptoms led eve to seek psychiatric help : In the movie, what symptoms led Eve to seek psychiatric help? What odd behaviors did Eve's husband notice

Reviews

Write a Review

 

Financial Management Questions & Answers

  Common stock and the investment banking process

Which of the following statements concerning common stock and the investment banking process is NOT CORRECT?

  Coupon rate is equal to the general interest rates in market

If the bond’s coupon rate is equal to the general interest rates in the market, the Bond will sell at a A. Premium B. Discount C. Neither A nor B. Projected sales growth assumes A. Adequate asset base B. Decrease in property, plant and equipment C. D..

  Bonds with similar characteristics are yielding

Tracy Morgan Productions has 80,000 bonds outstanding that are selling at par. Bonds with similar characteristics are yielding 6.75 percent. The company also has 750,000 shares of 7 percent preferred stock and 2.5 million shares of common stock outst..

  Yankee inc a us based mnc has recently decided to expand

yankee inc. a u.s. based mnc has recently decided to expand its international trade relationship by exporting to

  What are your call options worth

Suppose you purchase eight call contracts on Macron Technology stock. The strike price is $60, and the premium is $3.5. If, at expiration, the stock is selling for $67 per share, what are your call options worth? What is your net profit?

  The expected return on the market portfolio

Assume that the CAPM holds. Assume also that the expected return on the market portfolio is 10%. If a stock with a beta of 2 has an expected return of 15% in this economy, what is the expected return on a stock with a beta of 0.5?

  Company does not offer traditional pension plan

A recent college graduate has taken a new job at Work LLC and since the company does not offer a traditional pension plan, she plans to take advantage of a tax-free investment account backed by a reputable financial institution that offers a guarante..

  Characteristic of the price of stock

Which is a characteristic of the price of stock?

  What is minimum expected annual return for stock

In order to fund her retirement, Michele requires a portfolio with and expected return of 0.11 per year over the next 30 years. She has decided to invest in Stocks 1, 2, and 3, with 25 percent in Stock 1, 50 percent in Stock 2, and 25 percent in Stoc..

  What return would you expect on a stock with a beta

What return would you expect on a stock with a beta of 2.0?- What return would you expect on a stock with a beta of 0.66?

  Market is in equilibrium with the required return

Simpkins Corporation does not pay any dividends because it is expanding rapidly and needs to retain all of its earnings. However, investors expect Simpkins to begin paying dividends, with the first dividend of $1.75 coming 3 years from today. If the ..

  What is your loan balance after seven year grace period

What is your loan balance after the 7-year grace period?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd