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    Normal distribution and stock

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    You're not sure if you should buy a stock and need to discover the probability of the stock having a positive return (based on one year).

    The annual rates are: mean=4% & standard deviation = 5%

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    Solution Preview

    We first compute the Z-score by the formula: Z = (x - mu)/sigma = (x - 4)/5
    For any given value of x, we get the value of the ...

    Solution Summary

    This provides an example of probability of stock having positive return.