Suppose the returns on large-company stocks are normally distributed. The averag

Question

Suppose the returns on large-company stocks are normally distributed. The average annual return for large-company stocks from 1926 to 2009 was 12.9 percent and the standard deviation of those stocks for that period was 22.8 percent. Based on the historical record, the probability that in any given year you will lose money by investing in common stock is percent based on the cumulative normal probability table. (Do not include the percent sign (%). Round your answer to 2 decimal places. (e.g., 32.16)) Use the NORMDIST function in Excel to answer this question.

Suppose the returns on large-company stocks are normally distributed. The average annual return for large-company stocks from 1926 to 2009 was 12.9 percent and the standard deviation of those stocks for that period was 22.8 percent. Based on the historical record, the probability that in any given year you will lose money by investing in common stock is percent based on the cumulative normal probability table. (Do not include the percent sign (%). Round your answer to 2 decimal places. (e.g., 32.16)) Use the NORMDIST function in Excel to answer this question.

Explanation / Answer

so we find a z value and get the probability. (0-12.9)/22.8=-.565 I get 28.58%

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