Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Suppose the returns on long-term corporate bonds are normally distributed. The average annual return for long-term corporate bonds from 1926 to 2007 was 6.7 percent

Suppose the returns on long-term corporate bonds are normally distributed. The average annual return for long-term corporate bonds from 1926 to 2007 was 6.7 percent and the standard deviation of those bonds for that period was 8.8 percent.

image text in transcribed

(a) Based on this historical record, what is the approximate probability that your return on these bonds will be less than -2 percent in a given year? (Do not round intermediate calculations.)

image text in transcribed

(b) What range of returns would you expect to see 95 percent of the time? (Do not round intermediate calculations.)

image text in transcribed

(c) What range would you expect to see 99 percent of the time? (Do not round intermediate calculations.)

image text in transcribed

Suppose the returns on long-term corporate bonds are normally distributed. The average annual return for long-term corporate bonds from 1926 to 2007 was 6.7 percent and the standard deviation of those bonds for that period was 8.8 percent. (a) Based on this historical record, what is the approximate probability that your return on these bonds will be less than -2 percent in a given year? (Do not round intermediate calculations.) (b) What range of returns would you expect to see 95 percent of the time? (Do not round intermediate calculations.) (c) What range would you expect to see 99 percent of the time? (Do not round intermediate calculations.) Suppose the returns on long-term corporate bonds are normally distributed. The average annual return for long-term corporate bonds from 1926 to 2007 was 6.7 percent and the standard deviation of those bonds for that period was 8.8 percent. (a) Based on this historical record, what is the approximate probability that your return on these bonds will be less than -2 percent in a given year? (Do not round intermediate calculations.) (b) What range of returns would you expect to see 95 percent of the time? (Do not round intermediate calculations.) (c) What range would you expect to see 99 percent of the time? (Do not round intermediate calculations.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

A Fast And Frugal Finance

Authors: William P. Forbes, Aloysius Igboekwu, Shabnam Mousavi

1st Edition

0128124954, 978-0128124956

More Books

Students also viewed these Finance questions