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describe probability using normal distribution.

As-per to Investment Digest (‘Diversification and the Risk or Reward Relationship', Winter 1994, 1-3) the mean of the annual return for common stocks from 1926 to 1992 was 15.4%, as well as the standard deviation of the annual return was 24.5%. During the similar 67-year time span the mean of the annual return for long-term government bonds was 5.5% as well as the standard deviation was 6.0%. The article entitlements that the distributions of annual returns for both common stocks also long-term government bonds are bell-shaped and approximately symmetric. Presume that these distributions are distributed as normal random variables with the means as well as standard deviations given previously.

1. What the probability that the return for common stocks will be greater than 0%.

2. What the probability that the return for common stocks will be less than 20%.

Statistics and Probability, Statistics

  • Category:- Statistics and Probability
  • Reference No.:- M920296

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