Question: Suppose the average return on FTSE TMX Canada long-term bonds is 6.80% and the standard deviation is 8.00% and the average return and standard deviation
Suppose the average return on FTSE TMX Canada long-term bonds is 6.80% and the standard deviation is 8.00% and the average return and standard deviation on T-bills are 3.90% and 3.30%, respectively. Further assume that the returns are normally distributed. Use the NORMDIST function in Excele to answer the following questions. (Do not round. intermediate calculations. Round the final answers to 2 decimal places.) a. What is the probablity that in any given year, the return on long-term corporate bonds will be 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% ? c-1 in 1981, the return on FTSE TMX Canada long-term bonds was 4.35%. 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 10.60% in this same year. How likely is it that such a high retum on T-bills will recur at some point in the future? Probability
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