Suppose the returns on long-term corporate bonds and T-bills are normally distributed. Assume for a certain time period, long-term corporate bonds had an average return of 5.9% and a standard deviation of 9.2%. For the same period, T-bills had an average return of 4.4% and a standard deviation of 3.4%. Use the NORMDIST function in Excel® to answer the following questions:

a. What is the probability that in any given year, the return on long-term corporate bonds will be greater than 10 percent? Less than 0 percent? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

Probability of return greater than 10 percent %

Probability of return less than 0 percent %

b. What is the probability that in any given year, the return on T-bills will be greater than 10 percent? Less than 0 percent? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

Probability of T-bill return greater than 10 percent %

Probability of T-bill return less than 0 percent %

c. In one year, the return on long-term corporate bonds was -4.8 percent. How likely is it that such a low return will recur at some point in the future? T-bills had a return of 11.02 percent in this same year. How likely is it that such a high return on T-bills will recur at some point in the future? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

Probability of return on long-term corporate bonds less than -4.8 percent %

Probability of T-bill return greater than 11.02 percent %