In Exercise 7.64, we discovered that the expected return is .1060 and the standard deviation is .1456.

Question:

In Exercise 7.64, we discovered that the expected return is .1060 and the standard deviation is .1456. Working with the assumption that returns are normally distributed, determine the probability of the following events.

a. The portfolio loses money.

b. The return on the portfolio is greater than 20%.

Expected Return
The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these... Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...