Assume that the returns from an asset are normally distributed. The average annu

Question

Assume that the returns from an asset are normally distributed. The average annual return for this asset over a specific period was 16.9 percent and the standard deviation of those stocks in this period was 43.56 percent. What is the approximate probability that your money will double in value in a single year? (Do not round intermediate calculations and round your final answer to 2 decimal places, (e.g., 32.16)) What about triple in value? (Round your answer to 6 decimal places, (e.g., 32.161616))

Explanation / Answer

x= mean+ z*std dev

100% = 16.9% +z*43.56%

z=1.9077135

p value for z= 1.9077135 ==0.0282

probability that your money will double in value in a single year = 2.82%

Double in value = 2.46%

x= mean+ z*std dev

200% = 16.9% +z*43.56%

z=4.2033976

p value for z= 4.2033976 =0.000013

Triple in value =

0.001300%

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.