Problem 12-22 Using Probability Distributions (LO3) Suppose the average return on FTSE TMX Canada long-term bonds...

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Problem 12-22 Using Probability Distributions (LO3) Suppose the average return on FTSE TMX Canada long-term bonds is 6.50% and the standard deviation is 8.50% and the average return and standard deviation on T-bills are 3.70% and 3.00%, respectively. Further assume that the returns are normally distributed. Use the NORMDIST function in Excel to answer the following questions. (Do not round intermediate calculations. Round the final answers to 2 decimal places.) a. What is the probability that in any given year, the return on long-term corporate bonds will be greater than 10%? Less than 0%? Greater than 10% Less than 0% % % b. What is the probability that in any given year, the return on T-bills will be greater than 10%? Less than 0%? Greater than 10% Less than 0% % c-1. In 1981, the return on FTSE TMX Canada long-term bonds was -4.24%. How likely is it that such a low return will recur at some point in the future? Probability % c-2. T-bills had a return of 9.50% in this same year. How likely is it that such a high return on T-bills will recur at some point in the future? Probability % Problem 12-22 Using Probability Distributions (LO3) Suppose the average return on FTSE TMX Canada long-term bonds is 6.50% and the standard deviation is 8.50% and the average return and standard deviation on T-bills are 3.70% and 3.00%, respectively. Further assume that the returns are normally distributed. Use the NORMDIST function in Excel to answer the following questions. (Do not round intermediate calculations. Round the final answers to 2 decimal places.) a. What is the probability that in any given year, the return on long-term corporate bonds will be greater than 10%? Less than 0%? Greater than 10% Less than 0% % % b. What is the probability that in any given year, the return on T-bills will be greater than 10%? Less than 0%? Greater than 10% Less than 0% % c-1. In 1981, the return on FTSE TMX Canada long-term bonds was -4.24%. How likely is it that such a low return will recur at some point in the future? Probability % c-2. T-bills had a return of 9.50% in this same year. How likely is it that such a high return on T-bills will recur at some point in the future? Probability %