Question: 4. (18 points) Based on historical data for the 1926-2011 period, the average return and the standard deviation of the return for the large-company stocks

4. (18 points) Based on historical data for the 1926-2011 period, the average return and the standard deviation of the return for the large-company stocks are 11.8% and 20.3%, respectively. Assume the retums from the large-company stocks are normally distributed. Suppose you have $100,000 to invest in the Fidelity Large-Cap Equity Index Fund, a mutual fund that replicates the returns from large-cap stocks. What is the probability that your investment will not lose money this coming year? What is the probability that you ss than 10% from your investment this coming year? Assuming the inflation rate is expected to be 2.5 % for the coming year, what is the probability that you will not earn a positive real return from your investment

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

5.(15 points) Based on historical data for the 1926-2011 period, the average return and the standard deviation of the return for the large-company stocks are 11.8% and 20.3%, respectively. Assume the...

4. Based on historical data for the 1926-2008 period, the average return and the standard deviation of the return for the small-company stocks are 16.4% and 33.0%, respectively. Assume the returns...

Please do not use excel to answer question 4. Based on historical data for the 1926-2008 period, the average return and the standard deviation of the return for the small-company stocks are 16.4% and...

1. Laura bought 100 shares of stock X for $50/share at the start of 2013. During that calendar year, each share paid 4 dividends of $.25 each, plus its price rose to $55. She still owns these shares....

PROBLEM i Create a column of monthly returns for your 2 stocks and the following 3 portfolios. Organize your spreadsheet as follows: a. Date VRSN (#1) Portfolio 1 80% in A 20% in B Portfolio 2 50% in...

Assume that you recently graduated and landed a job as a financial planner with Cicero Services, an investment advisory company. Your first client recently inherited some assets and has asked you to...

Question 2 1 point possible Depending on the market convention, yields can be quoted on a yield (Y) or discount (D) basis. For the same instrument, which of the following is true? (Hint: if you don't...

just need answer 1. A bond matures in 14 years at $1,000. The bond has a coupon of 4% and makes semiannual payments. The bond currently sells for $1,037 and is callable in 5 years at a special price...

1. A bond matures in 14 years at $1,000. The bond has a coupon of 4% and makes semi-annual payments. The bond currently sells for $1,037 and is callable in 5 years at a special price of $1,020. What...

Kelson Sporting Equipment, Inc., makes two different types of baseball gloves: a regular model and a catchers model. The firm has 900 hours of production time available in its cutting and sewing...

What is the minimum order N of a Butterworth filter that meets the following criteria? Wpass = 10 rad/sec, Apass = -1dB, Wstop = 30 rad/sec, Astop = -20dB

All other factors being equal, which is preferable? $ 1 , 0 0 0 Tax Adjustment$ 1 , 0 0 0 Tax Deduction$ 1 , 0 0 0 Tax Credit

9. The Ace Manufacturing Company has orders for three similar products: Three machines are available for the manufacturing operations. All three machines can produce all the products at the same...

=+interactive online components, out-of-home messages, print ads,

=+Why does the brand want to advertise?

=+12. Did your concept illustrate the brand's personality?