Which investment has better chance of giving returns

Reference no: EM13119410

1) Investment A has an expected return of $25 million and investment B has an expected return of $5 million. Market risk analysts believe the standard deviation of return from A is $10 million and B is $30 million (negative returns possible). (a) if you assume returns follow a normal distribution, which investment has a better chance of giving you $40 million in returns. Can you please explain so I understand why the answer is 93% and 88% OR 7% and 12%? Is how would your answer to part a change if you knew there was a skewed distribution?

2) You are trying to get an important new customer to buy a product that you produce. Their decision to buy the product from you will depend primarily upon the speed at which you can produce the product once they have placed an order. Currently it takes you 70 hours to produce the product with a standard deviation of 8 hours. Production times follow a normal distribution. a.) What % of the time can you produce the product within 80 hours? b.)you want to promise that 95% of the time you can deliver the product in under ____ hours. What number should you put in the blank? Assuming the standard deviation stays the same, how much do you have to reduce your average production time so that 95% of the time you can deliver the product in under 75 hours?

Reference no: EM13119410

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