Skewed and normal distribution

Reference no: EM1395748

Investment A has an expected return of $25MIL and Investment B has an expected return of $5MIL. Market risk analysts believe the standard deviation of the return from A is $10MIL and for B is $30MIL (negative returns are possible).

(a) If you assume returns follow a normal distribution, which investment would give a better chance of getting at least a $40MIL return and explain why.

(b) How could your answer in question (a) change if you knew returns followed a skewed distribution instead of a normal distribution? Explain briefly.

Reference no: EM1395748

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