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Suppose the gain from an investment is a normal random variable with mean $10 and standard deviation $1.25. Compute the Variance for this investment.

Define the c%-Variance to be the value |v| such that there is only a c% chance that the loss from an investment will be greater than c.

a. Derive a formula for 5%-Variance on an investment with gain G that is normally distributed with mean and standard deviation .

b. If G has mean =15 and =1.8, compute the 5%-Variance on this investment 3). Investment A yields a gain that is normally distributed with mean 24 and standard deviation 4.5. Investment B yields a gain that is normally distributed with mean 23 and standard deviation 3.9. Which investment is better in terms of Variance?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92075155

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