Problemsuppose the returns on an asset are normally, Ask an Expert

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Problem:

Suppose the returns on an asset are normally distributed. Suppose the historical average annual return for the asset was 5.6 percent and the standard deviation was 10.3 percent.

Required:

Question 1: What is the probability that your return on this asset will be less than -2.5 percent in a given year? Use the NORMDIST function in Excel(R) to answer this question.

Question 2: What range of returns would you expect to see 95 percent of the time?

Question 3: What range would you expect to see 99 percent of the time?

Note: Provide support for rationale.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91172928

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