Question: Below are the historical arithmetic average returns and standard deviations for different asset classes. Asset class Mean return Standard deviation T-bills 0.035 0.031 Corporate bonds

Below are the historical arithmetic average returns and standard deviations for different asset classes.

Asset class Mean return Standard deviation
T-bills 0.035 0.031
Corporate bonds 0.063 0.084
Small company stocks 0.169 0.323
Large company stocks 0.121 0.202

Assume that the returns are normally distributed. Use Excel's NORM.DIST() function to answer the following questions.

1. What is the probability that the return on corporate bonds will be less than 3%?

2. What is the probability that the return on small-company stocks will be less than 3%?

3. What is the probability that the return on large-company stocks will be greater than 15%?

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