Question

Suppose the returns on an asset are normally distributed. The historical average annual return for the asset was 5.9 percent and the standard deviation was 10.5 percent. a. What range of returns would you expect to see 95 percent of the time? (A negative answer should be indicated by a minus sign. Enter your answers for the range from lowest to highest. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b. What range would you expect to see 99 percent of the time? (A negative answer should be indicated by a minus sign. Enter your answers for the range from lowest to highest. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

Answer #1

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1.
Over a particular period, an asset had an average return of 6.9
percent and a standard deviation of 9.9 percent.
What range of returns would you expect to see 95 percent of the
time for this asset? (A negative answer should be indicated
by a minus sign. Input your answers from lowest to highest to
receive credit for your answers. Do not round intermediate
calculations and enter your answers as a percent rounded to 2
decimal places, e.g., 32.16.)...

Consider the following table for the total annual returns for a
given period of time. Series Average return Standard Deviation
Large-company stocks 11.7 % 20.6 % Small-company stocks 16.4 33.0
Long-term corporate bonds 5.1 8.4 Long-term government bonds 6.1
9.4 Intermediate-term government bonds 5.6 5.7 U.S. Treasury bills
3.8 3.1 Inflation 3.1 4.2 What range of returns would you expect to
see 95 percent of the time for long-term corporate bonds? (A
negative answer should be indicated by a minus...

Consider the following
table for the total annual returns for a given period of
time.
Series
Average return
Standard Deviation
Large-company
stocks
10.8
%
21.1
%
Small-company
stocks
16.4
33.0
Long-term corporate
bonds
6.2
8.4
Long-term government
bonds
6.1
9.4
Intermediate-term
government bonds
5.6
5.7
U.S. Treasury
bills
3.8
3.1
Inflation
3.1
4.2
Requirement
1:
What range of returns would you expect to see 95 percent of the
time for large-company stocks? (Negative amount should be
indicated by a minus...

Suppose the returns on an asset are normally distributed.
Suppose the historical average annual return for the asset was 5.6
percent and the standard deviation was 10.3 percent. What is the
probability that your return on this asset will be less than –2.5
percent in a given year? Use the NORMDIST function in Excel® to
answer this question.
What range of returns would you expect to see 95 percent of the
time?
What range would you expect to see 99...

Assume that the returns from an asset are normally distributed.
The average annual return for this asset over a specific period was
14.7 percent and the standard deviation of those returns in this
period was 43.59 percent.
a.
What is the approximate probability that your money will double
in value in a single year? (Do not round intermediate
calculations and enter your answer as a percent rounded to 2
decimal places, e.g., 32.16.)
b.
What about triple in value? (Do...

Problem 10-18 Return Distributions [LO 3]
Consider the following table for different assets for 1926
through 2011.
Series
Average return
Standard Deviation
Large-company stocks
11.8
%
20.3
%
Small-company stocks
16.5
32.5
Long-term corporate bonds
6.4
8.4
Long-term government bonds
6.1
9.8
Intermediate-term government bonds
5.5
5.7
U.S. Treasury bills
3.6
3.1
Inflation
3.1
4.2
Requirement 1:
What range of returns would you expect to see 68 percent of the
time for large-company stocks? (Negative amount should be
indicated by...

Suppose the returns on an asset are normally distributed. The
average annual return for the asset over some period was 6.6
percent and the standard deviation of this asset for that period
was 9.0 percent.
Based on this information, what is the approximate probability
that your return on this asset will be less than -3.1 percent in a
given year?
What range of returns would you expect to see 95 percent of the
time?
What...

Assume that the returns from an asset are normally distributed.
The average annual return for this asset over a specific period was
16.8 percent and the standard deviation of the asset was 42.30
percent. Use the NORMDIST function in Excel® to answer this
question.
What is the approximate probability that your money will double
in value in a single year? (Do not round intermediate calculations
and enter your answer as a percent rounded to 3 decimal places,
e.g., 32.161.)
What...

Assume the returns from holding an asset are normally
distributed. Also assume the average annual return for holding the
asset a period of time was 15.9 percent and the standard deviation
of this asset for the period was 33.8 percent. Use the NORMDIST
function in Excel® to answer the following questions.
a.
What is the approximate probability that your money will double
in value in a single year? (Do not round intermediate
calculations and enter your answer as a percent...

Suppose the average return on Asset A is 6.5 percent and the
standard deviation is 8.5 percent, and the average return and
standard deviation on Asset B are 3.7 percent and 3 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?
(Do not...

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