What is the lower capability index

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Reference no: EM131388613

Refer to GIVEN Exercise. With the adoption of a slightly more conservative investment strategy, the bank forecasts a mean yield of 7.0% with a standard deviation of 0.9%. Assuming normality of distribution of yield rates, what is the lower capability index if the goal value is still 9.0%? In what proportion of the time will the goal be met?

Exercise
An investment bank has been monitoring its return on investment for a certain category of its shareholders. Past data show a mean yield of 7.5% with a standard deviation of 1.5%. Assuming normality of distribution of yield rates, if senior management has set a goal of 9% for yield, what is the lower capability index? In what proportion of the time will the goal be met?

Reference no: EM131388613

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