Suppose the average return on Asset A is 6.7 percent and the standard deviation is 7.9 percent and the average return and standard deviation on Asset B are 3.8 percent and 3.4 percent, respectively. Further assume that the returns are normally distributed. Use the NORMDIST function in Excel to answer the following questions.

a.

What is the probability that in any given year, the return on Assets A will be greater than 9 percent? Less than 0 percent? (Do not round intermediate calculations and round your answers to 2 decimal places. (e.g., 32.16))

Greater than 9 percent

%

Less than 0 percent

%

b.

What is the probability that in any given year, the return on Asset B will be greater than 9 percent? Less than 0 percent? (Do not round intermediate calculations and round your answers to 2 decimal places. (e.g., 32.16))

Greater than 9 percent

%

Less than 0 percent

%

c-1

In a particular year, the return on Asset A was 4.34 percent. How likely is it that such a low return will recur at some point in the future? (Do not round intermediate calculations and round your answers to 2 decimal places. (e.g., 32.16))

Probability

%

c-2

Asset B had a return of 10.50 percent in this same year. How likely is it that such a high return on Asset B will recur at some point in the future? (Do not round intermediate calculations and round your answers to 2 decimal places. (e.g., 32.16))

Probability

%