B D E F G H 3 Suppose the returns on long-term corporate bonds and T-bills are normally distributed. Based on the values below answer the following questions: a. What is the probability that in any given year, the return on long-term corporate 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 long-term corporate bonds was -2.76 percent. How likely is it that such a low return 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 such a high return on T-bills will recur at some point in the future? 4 5 6 7 6.30% 8.40% 8 9 10 11 Long-term corporate bonds Average return Standard deviation T-bills Average return Standard deviation a. Return greater than Return less than b. Return greater than Return less than c. Return less than 12 13 3.50% 3.10% 10.00% 0.00% 10.00% 0.00% -2.76% 14 15 16 A D E F G H 9 10 11 12 13 B T-bills Average return Standard deviation a. Return greater than Return less than b. Return greater than Return less than c. Return less than Return greater than 3.50% 3.10% 10.00% 0.00% 10.00% 0.00% -2.76% 10.56% 14 15 16 17 18 19 20 Complete the following analysis. Do not hard code values in your calculations. You must use the built-in Excel functions to answer this question. 21 a. Probability of return greater than 10% Probability of return less than 0% 22 23 24 25 26 27 b. Probability of return greater than 10% Probability of return less than 0% 28 C. Probability of return less than -2.76% Probability of return greater than 10.56% 29 30