The return expected from Project No. 542 is 22%. Thestandard deviation of these

Question

The return expected from Project No. 542 is 22%. Thestandard deviation of these returns is 11%. If returns fromthe project are normally disributed, what is the chance that theproject will result in a rate of return above 33%? What isthe probability that the projec will result in losses (negativerates of return)/ The return expected from Project No. 542 is 22%. Thestandard deviation of these returns is 11%. If returns fromthe project are normally disributed, what is the chance that theproject will result in a rate of return above 33%? What isthe probability that the projec will result in losses (negativerates of return)/

Explanation / Answer

Pr (Z > 1)= 1 - Pr(Z< 1) = 1-0.84134 =0.15866 (bylooking up standard normal distribution table)
Pr (X<0) = Pr ( (X-0.22)/)0.11 < (0-0.22)/0.11 ) Pr (Z <-2)= 1- Pr (Z<2) = 1-0.97725 = 0.02275 ( bylooking up standard normal distribution table)

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