Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

4. You are given the following probability distribution for XYZ common stock's returns during the next year, which are assumed to be normally distributed. Show

image text in transcribed

4. You are given the following probability distribution for XYZ common stock's returns during the next year, which are assumed to be normally distributed. Show all work below, and complete the following: Return 12% Probability 20% 60% 20% 16% 20% a. Calculate the standard deviation of the returns, and round to the nearest one-half percent. b. Draw a graphical representation of XYZ's normal distribution below (ye old bell-shaped curve). LABEL THE AXES OF THE GRAPH OR THE FOLLOWING RESULTS WILL BE MEANINGLESS. Using your result in part A for the standard deviation (rounded to the nearest one-half percent) explain and indicate on the graph, the probability that XYZ will return more than 13.5%, assuming a normal distribution. Difficulty: 3; Keywords: Expected Return, Standard Deviation, Normal Distribution

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

International Financial Management

Authors: Jeff Madura, Roland Fox

5th Edition

1473770505, 978-1473770508

More Books

Students also viewed these Finance questions

Question

Chemical engineering answer fastly 7 1 .

Answered: 1 week ago

Question

What are oxidation and reduction reactions? Explain with examples

Answered: 1 week ago