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Statistical Analysis: Annual Return

1. Suppose the annual return on XYZ stock follows a normal distribution with mean 0.12 and standard
deviation 0.30.

a. What is the probability that XYZ's value will decrease during a year?

b. What is the probability that the return on XYZ during a year will be at least 20%?

c. What is the probability that the return on XYZ during a year will be between -6% and 9%?

d. There is a 5% chance that the return on XYZ during a year will be greater than what value?

e. There is a 1% chance that the return on XYZ during a year will be less than what value?

f. There is a 95% chance that the return on XYZ during a year will be between which two values (equidistant from the mean)?

Solution Preview

Please see the attached excel book for more detailed calculations.
1. Suppose the annual return on XYZ stock follows a normal distribution with mean 0.12 and standard deviation 0.30.

a. What is the probability that XYZ's value will decrease during a year?
Z=(0-0.12)/0.30=-0.40
P(z<-0.40)=0.3446

b. What is the probability that ...

Solution Summary

The following posting helps with statistical analysis problems.

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