The average return and standard deviation on asset

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Reference no: EM131890384

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 round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places (e.g., 32.16).)

Greater than 10 percent % Less than 0 percent %

b. What is the probability that in any given year, the return on Asset B will be greater than 10 percent?

Less than 0 percent? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places (e.g., 32.16).)

Greater than 10 percent % Less than 0 percent %

c-1 In 1979, the return on Asset A was −4.24 percent. How likely is it that such a low return will recur at some point in the future? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).)

Probability %

c-2 Asset B had a return of 9.50 percent in this same year. How likely is it that such a high return on Asset B will recur at some point in the future? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).)

Probability %

Reference no: EM131890384

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