Further assume that the returns are normally distributed

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Reference no: EM131917979

Suppose the average return on Asset A is 6.4 percent and the standard deviation is 8.4 percent and the average return and standard deviation on Asset B are 3.6 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.

a. What is the probability that in any given year, the return on Asset A will be greater than 10 percent? Less than 0 percent? (Round your answers to 2 decimal places. (e.g., 32.16))

Greater than 10 percent %

Less than 0 percent %

b. What is the probability that in any given year, the return on Asset B will be greater than 10 percent? Less than 0 percent? (Round your answers to 2 decimal places. (e.g., 32.16))

Greater than 10 percent %

Less than 0 percent %

c-1. In 1979, the return on Asset A was −4.23 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))

Probability %

c-2. Asset B had a return of 9.40 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))

Probability %

Reference no: EM131917979

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