Question

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 rounded to 3
decimal places, e.g., 32.161.) |

b. |
What is the approximate probability that your money will triple
in value in a single year? (Do not round intermediate
calculations and enter your answer as a percent rounded to 8
decimal places, e.g., 32.16161616.) |

Answer #1

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 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...

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.,...

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...

Suppose the average return on Asset A is 6.8 percent and the
standard deviation is 8 percent, and the average return and
standard deviation on Asset B are 3.9 percent and 3.3 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...

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...

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...

Problem 10-28 Using Probability Distributions [LO 3] Suppose the
returns on long-term corporate bonds and T-bills are normally
distributed. Assume for a certain time period, long-term corporate
bonds had an average return of 5.8% and a standard deviation of
8.9%. For the same period, T-bills had an average return of 4.3%
and a standard deviation of 3.1%. Use the NORMDIST function in
Excel® to answer the following questions: a. What is the
probability that in any given year, the return...

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.)...

Suppose the returns on Asset Y are normally distributed. The
average annual return for this asset over 50 years was 13.4 percent
and the standard deviation of the returns was 23.5 percent. Based
on the historical record, use the cumulative normal probability
table (rounded to the nearest table value) in the appendix of the
text to determine the probability that in any given year you will
lose money by investing in common stock.
What is the probablility of a return...

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