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G suppose × e suppose × e Suppose x e suppose × e suppose X M Chapter × e Finance. > C | ezto.mheducation.com/hm.tpx 5. 20.00 points Suppose the returns on an asset are normally distributed. Suppose the historical average annual return for the asset was 5 percent and the standard deviation was 18.4 percent. What is the probability that your return on this asset will be less than -6.5 percent in a given year? Use the NORMDIST function in Excek to answer this question. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).) What range of returns would you expect to see 95 percent of the time? (Enter your answers for the range from lowest to highest. Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places (e.g., 32.16).) 95% level What range would you expect to see 99 percent of the time? (Enter your answers for the range from lowest to highest. Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places (e.g., 32.16).) 99% level %to References Worksheet DI CARLOS ampo..m.. Show all | × 21:08 O Type here to search pf ^ 4( ) 07/11/2017 2Explanation / Answer
1. Normdist(-6.5, 5, 18.4,1) will give a value of 26.599%
which is the probability that 26.60% of the values will be less than -6.5 if mean of a population is 5 and std deviation is 18 and the distribution is normal.
2. 95% range for a normal distribution lies within 1.96 times standard deviation on each side:
Thus, 5%-1.96*18.4% , 5%+1.96*18.4%
Thus the range is -31.064% to 41.064%
3. Instead of 1.96 use, 2.58 to get 99% range:
-42.47, 52.47
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