A bank estimates that its profit next year is normally distributed with a mean of 0.9% of assets and the standard deviation of 3% of assets. How much equity (as a percentage of assets) does the company need to be 99.9% sure that it will have positive equity at the end of the year? Ignore taxes.

Question 7Answer

a.

2.19

b.

9.27

c.

8.37

d.

3.09