According to Investment Digest (Diversification and the Risk/Reward Relationship, Winter 1994, 1-3), the mean of the annual return for common stocks from 1926 to 1992 was 16.5%, and the standard deviation of the annual return was 19%.

a.What is the probability that the stock returns are greater than 0%?

b.What is the probability that the stock returns are less than 18%?

1. P(X > 0) = 80.7%; P(X<18) = 53.2%

2. P(X > 0) = 86.7%; P(X<18) = 53.2%

3. P(X > 0) = 19.2%; P(X<18) = 46.8%

4. P(X > 0) = 29.7%; P(X<18) = 53.2%