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Suppose the returns on large-company stocks are normally distributed. The average annual return for large-company stocks from 1926 to 2007 was 13.4 percent and the
Suppose the returns on large-company stocks are normally distributed. The average annual return for large-company stocks from 1926 to 2007 was 13.4 percent and the standard deviation of those stocks for that period was 23.5 percent. Based on the historical record, use the cumulative normal probability table (rounded to the nearest table value) in the appendix of the text to determine the probability that in any given year you will lose money by investing in common stock.
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