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Suppose the average return on Asset A is 6.7 percent and the standard deviation is 7.9 percent and the average return and standard deviation on Asset B are 3.8 percent and 3.4 percent, respectively. Further assume that the returns are normally distributed. Use the NORMDIST function in Excel® to answer the following questions.
a.
What is the probability that in any given year, the return on Assets A will be greater than 9 percent? Less than 0 percent? (Do not round intermediate calculations and round your answers to 2 decimal places. (e.g., 32.16))
Greater than 9 percent
%
Less than 0 percent
%
b.
What is the probability that in any given year, the return on Asset B will be greater than 9 percent? Less than 0 percent? (Do not round intermediate calculations and round your answers to 2 decimal places. (e.g., 32.16))
Greater than 9 percent
%
Less than 0 percent
%
c-1
In a particular year, the return on Asset A was −4.34 percent. How likely is it that such a low return will recur at some point in the future? (Do not round intermediate calculations and round your answers to 2 decimal places. (e.g., 32.16))
Probability
%
c-2
Asset B had a return of 10.50 percent in this same year. How likely is it that such a high return on Asset B will recur at some point in the future? (Do not round intermediate calculations and round your answers to 2 decimal places. (e.g., 32.16))
Probability
%
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