Assume that the returns from holding small-company stocks are normally distributed. Refer toFigure12.10andTable A.5.

a. What is the approximate probability that your money will double in value in a single year?

b.Whatabout triple in value?

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TABLE A.5 Cumulative normal distribution N(d) .0571 .0594 .0618 .0643 .0668 .0694 .0721 .0749 .0778 .0808 .0838 .0669 .0901 .0934 d -3.00 -2.95 -2.90 -2.85 -2.80 -2.75 -2.70 -2.65 -2.60 -2.55 -2.50 -2.45 -2.40 -2.35 -2.30 -2.25 -2.20 -2.15 -2.10 -2.05 -2.00 -1.98 -1.96 -1.94 -1.92 -1.90 -1.88 -1.86 -1.84 -1.82 -1.80 -1.78 -1.76 -1.74 -1.72 -1.70 -1.68 -1.66 -1.64 -1.62 -1.60 N(d) .0013 .0016 .0019 .0022 .0026 .0030 .0035 .0040 .0047 .0054 .0062 .0071 .0062 .0094 .0107 .0122 .0139 .0158 .0179 .0202 .0228 .0239 .0250 .0262 .0274 .0287 .0301 .0314 .0329 .0344 .0359 .0375 .0392 .0409 .0427 .0446 .0465 .0485 .0505 .0526 .0548 d -1.58 -1.56 -1.54 -1.52 -1.50 -1.48 -1.46 -1.44 -1.42 -1.40 -1.38 -1.36 -1.34 -1.32 -1.30 -1.28 -1.26 -1.24 -1.22 -1.20 -1.18 -1.16 -1.14 -1.12 -1.10 -1.08 -1.06 -1.04 -1.02 -1.00 -.98 <-.96 -.94 -.92 -.90 -.88 -.86 -.84 -.82 -.80 -.78 .0968 .1003 .1038 .1075 .1112 .1151 1190 .1230 .1271 .1314 .1357 .1401 .1446 .1492 1539 .1587 1635 .1685 1736 1788 .1841 .1894 1949 .2005 .2061 2119 2177 d -.76 -.74 <-.72 -.70 -.68 -.66 -.64 -.62 -.60 -.58 -.56 -.54 -.52 -.50 -.48 -.46 -.44 -.42 -.40 -.38 -.36 -.34 -.32 -.30 -.28 -.26 -.24 -.22 -.20 -.18 -.16 -.14 -.12 -.10 -.08 -.06 -.04 -.02 .00 .02 .04 N(d) 2236 2297 2358 2420 2483 2546 2611 2676 2743 .2810 2877 2946 3015 3085 .3156 3228 3300 3372 3446 3520 3594 3669 .3745 3821 3897 3974 4052 4129 4207 4286 4364 4443 4522 4602 4681 4761 4840 4920 5000 5080 5160 d .06 .06 .10 .12 .14 .16 .18 .20 .22 .24 .26 .28 30 32 .34 .36 38 .40 42 .44 .46 .48 .50 .52 .54 .56 .58 .60 .62 .64 .66 .68 .70 .72 .74 .76 .78 .80 .82 .84 N(d) .5239 .5319 .5398 .5478 .5557 .5636 .5714 .5793 .5871 .5948 .6026 .6103 .6179 .6255 .6331 .6406 .6480 .6554 .6628 .6700 .6772 .6844 .6915 .6985 .7054 .7123 .7190 .7257 .7324 .7389 .7454 .7518 .7580 .7642 .7704 .7764 .7823 .7881 .7939 .7995 d .86 .88 .90 .92 .94 .96 .98 1.00 1.02 1.04 1.06 1.08 1.10 1.12 1.14 1.16 1.18 1.20 1.22 1.24 1.26 1.28 1.30 1.32 1.34 1.36 1.38 1.40 1.42 1.44 1.46 1.48 1.50 1.52 1.54 1.56 1.58 1.60 1.62 1.64 N(d) .8051 .8106 .8159 .8212 .8264 .8315 .8365 .8413 .8461 .8508 .8554 .8599 .8643 .8686 .8729 .8770 .8810 .8849 .8888 .8925 .8962 .8997 .9032 .9066 .9099 .9131 .9162 .9192 .9222 .9251 .9279 .9306 .9332 .9357 .9382 .9406 .9429 .9452 .9474 .9495 d 1.66 1.68 1.70 1.72 1.74 1.76 1.78 1.80 1.82 1.84 1.86 1.88 1.90 1.92 1.94 1.96 1.98 2.00 2.05 2.10 2.15 2.20 2.25 2.30 2.35 2.40 2.45 2.50 2.55 2.60 2.65 2.70 2.75 2.80 2.85 2.90 2.95 3.00 3.05 This table shows the probability [N(d)] of observing a value less than or equal to d. For example, as illustrated, if d is-.24, then N(d) is .4052. N(d) .9515 .9535 .9554 .9573 .9591 .9608 .9625 .9641 .9656 .9671 .9686 .9699 .9713 .9726 .9738 .9750 .9761 .9772 .9798 .9821 .9842 .9861 .9878 .9893 .9906 .9918 .9929 .9938 .9946 .9953 .9960 .9965 .9970 .9974 .9978 .9981 .9984 .9987 .9989 TABLE A.5 Cumulative normal distribution N(d) .0571 .0594 .0618 .0643 .0668 .0694 .0721 .0749 .0778 .0808 .0838 .0669 .0901 .0934 d -3.00 -2.95 -2.90 -2.85 -2.80 -2.75 -2.70 -2.65 -2.60 -2.55 -2.50 -2.45 -2.40 -2.35 -2.30 -2.25 -2.20 -2.15 -2.10 -2.05 -2.00 -1.98 -1.96 -1.94 -1.92 -1.90 -1.88 -1.86 -1.84 -1.82 -1.80 -1.78 -1.76 -1.74 -1.72 -1.70 -1.68 -1.66 -1.64 -1.62 -1.60 N(d) .0013 .0016 .0019 .0022 .0026 .0030 .0035 .0040 .0047 .0054 .0062 .0071 .0062 .0094 .0107 .0122 .0139 .0158 .0179 .0202 .0228 .0239 .0250 .0262 .0274 .0287 .0301 .0314 .0329 .0344 .0359 .0375 .0392 .0409 .0427 .0446 .0465 .0485 .0505 .0526 .0548 d -1.58 -1.56 -1.54 -1.52 -1.50 -1.48 -1.46 -1.44 -1.42 -1.40 -1.38 -1.36 -1.34 -1.32 -1.30 -1.28 -1.26 -1.24 -1.22 -1.20 -1.18 -1.16 -1.14 -1.12 -1.10 -1.08 -1.06 -1.04 -1.02 -1.00 -.98 <-.96 -.94 -.92 -.90 -.88 -.86 -.84 -.82 -.80 -.78 .0968 .1003 .1038 .1075 .1112 .1151 1190 .1230 .1271 .1314 .1357 .1401 .1446 .1492 1539 .1587 1635 .1685 1736 1788 .1841 .1894 1949 .2005 .2061 2119 2177 d -.76 -.74 <-.72 -.70 -.68 -.66 -.64 -.62 -.60 -.58 -.56 -.54 -.52 -.50 -.48 -.46 -.44 -.42 -.40 -.38 -.36 -.34 -.32 -.30 -.28 -.26 -.24 -.22 -.20 -.18 -.16 -.14 -.12 -.10 -.08 -.06 -.04 -.02 .00 .02 .04 N(d) 2236 2297 2358 2420 2483 2546 2611 2676 2743 .2810 2877 2946 3015 3085 .3156 3228 3300 3372 3446 3520 3594 3669 .3745 3821 3897 3974 4052 4129 4207 4286 4364 4443 4522 4602 4681 4761 4840 4920 5000 5080 5160 d .06 .06 .10 .12 .14 .16 .18 .20 .22 .24 .26 .28 30 32 .34 .36 38 .40 42 .44 .46 .48 .50 .52 .54 .56 .58 .60 .62 .64 .66 .68 .70 .72 .74 .76 .78 .80 .82 .84 N(d) .5239 .5319 .5398 .5478 .5557 .5636 .5714 .5793 .5871 .5948 .6026 .6103 .6179 .6255 .6331 .6406 .6480 .6554 .6628 .6700 .6772 .6844 .6915 .6985 .7054 .7123 .7190 .7257 .7324 .7389 .7454 .7518 .7580 .7642 .7704 .7764 .7823 .7881 .7939 .7995 d .86 .88 .90 .92 .94 .96 .98 1.00 1.02 1.04 1.06 1.08 1.10 1.12 1.14 1.16 1.18 1.20 1.22 1.24 1.26 1.28 1.30 1.32 1.34 1.36 1.38 1.40 1.42 1.44 1.46 1.48 1.50 1.52 1.54 1.56 1.58 1.60 1.62 1.64 N(d) .8051 .8106 .8159 .8212 .8264 .8315 .8365 .8413 .8461 .8508 .8554 .8599 .8643 .8686 .8729 .8770 .8810 .8849 .8888 .8925 .8962 .8997 .9032 .9066 .9099 .9131 .9162 .9192 .9222 .9251 .9279 .9306 .9332 .9357 .9382 .9406 .9429 .9452 .9474 .9495 d 1.66 1.68 1.70 1.72 1.74 1.76 1.78 1.80 1.82 1.84 1.86 1.88 1.90 1.92 1.94 1.96 1.98 2.00 2.05 2.10 2.15 2.20 2.25 2.30 2.35 2.40 2.45 2.50 2.55 2.60 2.65 2.70 2.75 2.80 2.85 2.90 2.95 3.00 3.05 This table shows the probability [N(d)] of observing a value less than or equal to d. For example, as illustrated, if d is-.24, then N(d) is .4052. N(d) .9515 .9535 .9554 .9573 .9591 .9608 .9625 .9641 .9656 .9671 .9686 .9699 .9713 .9726 .9738 .9750 .9761 .9772 .9798 .9821 .9842 .9861 .9878 .9893 .9906 .9918 .9929 .9938 .9946 .9953 .9960 .9965 .9970 .9974 .9978 .9981 .9984 .9987 .9989

Answer rating: 100% (QA)

a Doubling of money means a 100 return So zscore will be ... View the full answer