Question

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 is the probability of the asset tripling in value? (Do not round intermediate calculations and enter your answer as a percent rounded to 6 decimal places, e.g., 32.161616.)

Answer #1

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...

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 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. 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 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...

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...

Use the following returns for X and Y.
Returns
Year
X
Y
1
21.8
%
26.4
%
2
–
16.8
–
3.8
3
9.8
28.4
4
19.6
–
14.6
5
4.8
32.4
Requirement 1:
Calculate the average returns for X and Y.
(Do not round intermediate calculations.
Enter your answers as a percentage rounded to 2
decimal places (e.g., 32.16).)
Average returns
X
%
Y
%
Requirement 2:
Calculate the variances for X and Y. (Do not...

You’ve observed the following returns on Barnett Corporation’s
stock over the past five years: –27.3 percent, 15.2 percent, 33.4
percent, 3.1 percent, and 22.1 percent.
What was the arithmetic average return on the stock over this
five-year period? (Do not round intermediate calculations
and enter your answer as a percent rounded to 2 decimal places,
e.g., 32.16.)
Arithmetic average return % =
What was the variance of the returns over this period?
(Do not round intermediate calculations and round your...

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.)...

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