A First Course in Probability (10th Edition)
A First Course in Probability (10th Edition)
10th Edition
ISBN: 9780134753119
Author: Sheldon Ross
Publisher: PEARSON
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Normal probability distribution Assuming that the rates of return associated with a given asset investment are normally distributed; that the expected return, r,
18.6%; and that the coefficient of variation, CV, is 0.82, answer the following questions:
a. Find the standard deviation of returns, o,.
b. Calculate the range of expected return outcomes associated with the following probabilities of occurrence: (1) 68%, (2) 95%, (3) 99%.
a. The standard deviation of returns, o,, is 15.252 %. (Round to three decimal places.)
b. (1) The lowest possible expected return associated with the 68% probability of occurrence is %. (Round to two decimal places.)
The highest possible expected return associated with the 68% probability of occurrence is
%. (Round to two decimal places.)
(2) The lowest possible expected return associated with the 95% probability of occurrence is
%. (Round to two decimal places.)
The highest possible expected return associated with the 95% probability of occurrence is
%. (Round to two decimal places.)
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Transcribed Image Text:Normal probability distribution Assuming that the rates of return associated with a given asset investment are normally distributed; that the expected return, r, 18.6%; and that the coefficient of variation, CV, is 0.82, answer the following questions: a. Find the standard deviation of returns, o,. b. Calculate the range of expected return outcomes associated with the following probabilities of occurrence: (1) 68%, (2) 95%, (3) 99%. a. The standard deviation of returns, o,, is 15.252 %. (Round to three decimal places.) b. (1) The lowest possible expected return associated with the 68% probability of occurrence is %. (Round to two decimal places.) The highest possible expected return associated with the 68% probability of occurrence is %. (Round to two decimal places.) (2) The lowest possible expected return associated with the 95% probability of occurrence is %. (Round to two decimal places.) The highest possible expected return associated with the 95% probability of occurrence is %. (Round to two decimal places.)
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