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Question 5

You are considering investing in a well-diversified portfolio of various stock. Your stockbroker has informed you that the expected return for such a portfolio is 12.3%. Further information reveals that the standard deviation of such a portfolio is 6.5%. Based on the information provided, what is the

a) probability or chance of positive returns.

b) threshold for outliers? That is, find the interval outside of which outlier returns would be found.