Distributions are distributed as normal random variables

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Reference no: EM1399417

According to Investment Digest Diversification as well as the Risk/Reward Relationship Winter 1994, 1-3, the mean of the annual arrival for common stocks from 1926 to 1992 was 19.4%, also the standard deviation of the annual return was 24.5%. Throughout the same 67-year time span the mean of the annual return for long-term government bonds was 5.5%, also the standard deviation was 6.0%. The article privileges that the distributions of annual returns for both common stocks as well as long-term government bonds are bell-shaped as well as approximately symmetric. Presume that these distributions are distributed as normal random variables with the means as well as standard deviations given previously.

Find the possibility that the return for common stocks will be greater than 8%.

Find the possibility that the return for common stocks will be greater than 20%.

Reference no: EM1399417

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