Question 1: Assume that the returns from an asset are normally distributed. The average annual return for this asset over a specific period was 14.5 percent and the standard deviation of those returns in this period was 40.5 percent.
What about triple in value?
Question 2: Suppose the average return on an asset is 12 percent and the standard deviation is 20.5 percent. Further assume that the returns are normally distributed. Use the NORMDIST function in Excel® to determine the probability that in any given year you will lose money by investing in this asset.