Question 3 (15 marks) Barilaro Ltd is a publicly listed company on the Australian Securities Exchange. Barilaros annual stock returns are assumed to be normally distributed with a mean of 0.08 and a standard deviation of 0.04.

a. What is the probability of Barilaros stock return exceeding 12%? Show all working. (3 marks)

b. What is the probability of Barilaros stock return being less than -8%? Show all working. (3 marks)

c. What is the probability of Barilaros stock return falling between 9% and 13%? Show all working. (3 marks)

d. Discuss the disadvantages of assuming that stock returns are normally distributed. (3 marks)

e. Discuss the difficulties associated with utilising ex-ante measures of risk. (3 marks)