# Question: Suppose the returns on bonds and T bills are normally distributed

Suppose the returns on bonds and T-bills are normally distributed. Based on the historical record, use the NORMDIST function in Microsoft Excel to answer the following questions:

a. What is the probability that in any given year, the return on bonds will be greater than 10 percent? Less than 0 percent?

b. What is the probability that in any given year, the return on T-bills will be greater than 10 percent? Less than 0 percent?

c. In 1979, the return on bonds was -4.18 percent. How likely is it that a return this low will recur at some point in the future? T-bills had a return of 10.56 percent in this same year. How likely is it that a return on T-bills this high will recur at some point in the future?

a. What is the probability that in any given year, the return on bonds will be greater than 10 percent? Less than 0 percent?

b. What is the probability that in any given year, the return on T-bills will be greater than 10 percent? Less than 0 percent?

c. In 1979, the return on bonds was -4.18 percent. How likely is it that a return this low will recur at some point in the future? T-bills had a return of 10.56 percent in this same year. How likely is it that a return on T-bills this high will recur at some point in the future?

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