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Suppose the returns on long-term corporate bonds and T-bills are normally distributed (Figure 12.10). Use the NORMDIST function in Excel to answer the following questions.
Suppose the returns on long-term corporate bonds and T-bills are normally distributed (Figure 12.10). Use the NORMDIST function in Excel to answer the following questions. |
a. | What is the probability that in any given year, the return on long-term corporate bonds will be greater than 10 percent? Less than 0 percent? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) |
b. | What is the probability that in any given year, the return on T-bills will be greater than 10 percent? Less than 0 percent? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) |
c-1. | In 1979, the return on long-term government bonds was 2.76 percent. How likely is it that such a low return will recur at some point in the future? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
c-2. | T-bills had a return of 10.56 percent in this same year. How likely is it that such a high return on T-bills will recur at some point in the future? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
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