# Question

For each investment class in Table 3.9 (page 139), assume that future returns are normally distributed with the population mean and standard deviation given in Table 3.9. Based on this assumption:

a. For each investment class, find the probability of a return that is less than zero (that is, find the probability of a loss). Is your answer reasonable for all investment classes? Explain.

b. For each investment class, find the probability of a return that is: (1) Greater than 5 percent. (3) Greater than 20 percent. (2) Greater than 10 percent. (4) Greater than 50 percent.

c. For which investment classes is the probability of a return greater than 50 percent essentially zero? For which investment classes is the probability of such a return greater than 1 percent? Greater than 5 percent?

d. For which investment classes is the probability of a loss essentially zero? For which investment classes is the probability of a loss greater than 1 percent? Greater than 10 percent? Greater than 20 percent?

a. For each investment class, find the probability of a return that is less than zero (that is, find the probability of a loss). Is your answer reasonable for all investment classes? Explain.

b. For each investment class, find the probability of a return that is: (1) Greater than 5 percent. (3) Greater than 20 percent. (2) Greater than 10 percent. (4) Greater than 50 percent.

c. For which investment classes is the probability of a return greater than 50 percent essentially zero? For which investment classes is the probability of such a return greater than 1 percent? Greater than 5 percent?

d. For which investment classes is the probability of a loss essentially zero? For which investment classes is the probability of a loss greater than 1 percent? Greater than 10 percent? Greater than 20 percent?

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