Question: 1. A rms prot next year will be normally distributed with a mean of 0.6% of assets and a standard deviation of 1.5% of assets.

1. A rms prot next year will be normally distributed with a mean of 0.6% of assets and a standard deviation of 1.5% of assets. The rms equity is 4% of the assets. (a) What is the probability that the rm will have a positive equity at the end of the year? [Hint: useExcelcommandNORMDISTtocalculateprobabilitiesofnormaldistribution.] (b) What is the 1-year 95%-VaR of the rms loss? (in terms of percentage of the assets)

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