Question

Normal probability distribution   Assuming that the rates of return associated with a given asset investment are...

Normal probability distribution   Assuming that the rates of return associated with a given asset investment are normally​ distributed; that the expected​ return,

r​,

is

15.9​%;

and that the coefficient of​ variation,

CV​,

is

0.55​,

answer the following​ questions:a.  Find the standard deviation of​ returns,

σr.

b.  Calculate the range of expected return outcomes associated with the following probabilities of​ occurrence: (1)​ 68%, (2)​ 95%, (3)​ 99%.

a.  The standard deviation of​ returns,

σr​,

is

nothing​%.

​(Round to three decimal​ places.)b. ​(1) The lowest possible expected return associated with the​ 68% probability of occurrence is

nothing​%.

​(Round to two decimal​ places.)The highest possible expected return associated with the​ 68% probability of occurrence is

nothing​%.

​(Round to two decimal​ places.)​(2) The lowest possible expected return associated with the​ 95% probability of occurrence is

nothing​%.

​(Round to two decimal​ places.)The highest possible expected return associated with the​ 95% probability of occurrence is

nothing​%.

​(Round to two decimal​ places.)​(3) The lowest possible expected return associated with the​ 99% probability of occurrence is

nothing​%.

​(Round to two decimal​ places.)The highest possible expected return associated with the​ 99% probability of occurrence is

nothing​%.

​(Round to two decimal​ places.)

Homework Answers

Answer #1

ANSWER SUMMARY

Standard deviaition= 8.745%

Lowest 68% return= 7.16%

Highest 68% return= 24.65%

Lowest 95% return= -1.59%

Highest 95% return= 33.39%

Lowest 99% return= -10.34%

Highest 99% return= 42.14%

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