Suppose the returns on large-company stocks are normally distributed. Also suppo

Question

Suppose the returns on large-company stocks are normally distributed. Also suppose large-company stocks had an average return of 12.4% and a standard deviation of 28.6%. Use the NORMDIST function in Excel®to answer the following question:

Determine the probability that in any given year you will lose money by investing in common stock. (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

Suppose the returns on large-company stocks are normally distributed. Also suppose large-company stocks had an average return of 12.4% and a standard deviation of 28.6%. Use the NORMDIST function in Excel®to answer the following question:

Explanation / Answer

Using Z Statistics we find

Z=X-Average Return/Standard deviation

= 0-12.4/28.4

=-0.4336

Pr(R=0) = 33.23%

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

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