# Question: Suppose the annual return on XYZ stock follows a normal

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)?

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)?

## Answer to relevant Questions

Assume the annual mean return on ABC stock is around 15% and the annual standard deviation is around 25%. Assume the annual and daily returns on ABC stock are normally distributed. a. What is the probability that ABC will ...In the financial world, there are many types of complex instruments called derivatives that derive their value from the value of an underlying asset. Consider the following simple derivative. A stock’s current price is $80 ...A company assembles a large part by joining two smaller parts together. Assume that the smaller parts are normally distributed with a mean length of 1 inch and a standard deviation of 0.01 inch. a. What fraction of the ...Using a data table in Excel, perform a sensitivity analysis on the example in Simple Decision Problem.xlsx. Specifically, keep the probabilities in row 10 (for D2) as they are, but vary the probability in cell C11 from 0 to ...In the SciTools example, you might argue that there is a continuum of possible low competitor bids (given that there is at least one competing bid), not just four possibilities. In fact, assume the low competitor bid in this ...Post your question