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Suppose that you have a stock with an average (expected) return of 32% and a standard...

Suppose that you have a stock with an average (expected) return of 32% and a standard deviation of return of 16%. Please answer the following question (show your work in your uploaded document):

What is the probability of getting a return greater than 48%? (Round to 4 decimals, like .0000 or 00.00%)

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Answer #1

probability of getting a return greater than 48% = 1 -  probability of getting a return less than 48%

probability of getting a return less than 48% is calculated using NORM.DIST function in Excel :

x = 48%

mean = 32%

standard_dev = 16%

cumulative = true

NORM.DIST is calculated to be 84.13%

probability of getting a return greater than 48% = 1 - 84.13%

probability of getting a return greater than 48% = 15.87%

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