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 17.1 percent and the standard deviation of those stocks in this period was 41.70 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))

Assume that the returns from an asset are normally distributed. The average annual return for this asset over a specific period was 17.1 percent and the standard deviation of those stocks in this period was 41.70 percent.

Explanation / Answer

Average Annual return (Mean) 17.10% Standard Deviation 41.70% Double value (X) 100% Probability that your money will double in value in a single year 2.34% Excel Function NORMDIST(17.10%,100%,41.70%,TRUE) Average Annual return (Mean) 17.10% Standard Deviation 41.70% Double value (X) 200% Probability that your money will Triple in value in a single year 50.00% Excel Function NORMDIST(17.10%,200%,41.70%,TRUE)

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