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 returns 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. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

What about triple in value? (Do not round intermediate calculations. Enter your answer as a percent rounded to 6 decimal places, e.g., 32.161616.)

What is the approximate probability that your money will double in value in a single year? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Explanation / Answer

Probability of doubling z = x - mean/standard deviation 2x = x - 0.169x /0.4356 95.39% Probability of tripling z = x - mean/standard deviation 3x= x - 0.169x /0.4356 63.5900%

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