Question

A.Your stock investment returns were 8%, 12%, and -4% in consecutive years. What is the average...

A.Your stock investment returns were 8%, 12%, and -4% in consecutive years. What is the average return?

. (Use decimals, not percent in your calculation and for your answer. Round your answer to 4 decimal places.)

B. What is the sample standard deviation of your investment's return?

(Use decimals, not percent in your calculations. Round to 5 decimal places in intermediate steps and round to 4 decimal places in the final step.)

C. Using the standard deviation and mean that you just calculated, and assuming a normal probability distribution, what is the probability of losing 3% or more?

%. (Use percent.)

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Homework Answers

Answer #1

a. Expected Return = 0.0533

b. Standard deviation = 0.0833

c. Probability = Z((Required Return - Mean) / Standard deviation)

Probability = Z((3%- 5.33%) / 8.33%)

Probability = Z(X<-0.28)

Probability = 0.3897

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