In many cases you can assume that the portfolio return is at least approximately normally distributed. Then

Question:

In many cases you can assume that the return is at least approximately normally distributed. Then you can use Excel’s NORMDIST function as in Chapter 5 to calculate the probability that the return is negative. The relevant formula is = NORMDIST(0,mean,stdev,1), where mean and stdev are the expected return and standard deviation of return, respectively.
a. Modify the optimization model slightly, and then run Solver to find the that achieves at least a 0.12 (12%) and minimizes the probability of a negative return. Do you get the same optimal as before? What is the probability that the return from this will be negative?
b. Using the model in part a, create a chart of the efficient frontier. However, this time put the probability of a negative return on the horizontal axis.

Expected Return
The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these... Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...