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 5.7 percent and the standard deviation of those bonds for that period was 9.2 percent. TABLE A.11 Cumulative Areas under the Standard Normal Curve Z .01 .000) .04 0003 0004 .05 000) 0004 .06 0003 .07 0003 .08 0003 0004 0004 0001 .0005 0007 .02 0003 0005 0006 0000 0013 0018 -33 -32 -3.1 -3.0 -2.9 .00 0003 DOOS 0002 0010 0012 0019 0026 0035 03 0003 0004 0006 0009 0012 0017 .0005 .09 .0002 .0003 0005 0007 .0005 0006 0008 0012 0016 0006 0000 0011 .0006 .0008 .0011 0000 .0011 0007 0010 0014 0010 0016 0015 0015 -20 0014 .0019 .0020 0027 0026 -2.7 -26 -2.5 0024 0033 0044 0059 0023 0032 0043 0057 0023 0031 0041 0055 0022 0030 0040 0054 0021 0029 .0039 0052 0021 0028 .0038 .0051 0047 0062 .0036 .0040 0037 0049 0066 0087 -2.4 0082 0000 0012 .0018 0025 0034 .0045 COGO DOBO 0104 0136 0174 0222 0281 0351 0036 0537 0078 0075 -2.3 LOLO 6ELO OLIO COLO ZEIO OLIO 6600 6210 9910 .0069 .0091 .0119 .0154 0197 .0068 0089 .0116 0150 0192 0113 .0064 0084 .0110 0103 0183 -2.1 -20 0217 0146 0188 0212 -1.9 .0250 0244 0239 0228 0287 0350 0446 0540 0268 0336 -1.0 0073 0006 0125 0162 0207 0262 0329 0409 0505 0618 0749 0901 0314 0307 0301 0233 0204 .0367 .0455 -17 0392 0375 0304 .0475 0485 0274 0344 0427 0526 0643 0778 0934 1112 0465 -1.5 -14 -13 -12 0668 OSOS 0968 1151 .1357 .1567 .1841 2119 0655 0793 0951 1131 1335 0010 0516 0630 0764 0918 .1093 1292 1515 0071 0094 0122 0158 0202 0256 0322 0401 0005 OGO 0735 0885 .1056 .1251 .1460 1711 1977 2266 2578 2912 3264 3632 4013 4404 0594 0721 0869 .1038 .1230 1446 1605 0582 0708 0853 1020 .12.10 0571 0694 0830 1003 1075 .1314 1562 1814 -1.1 -1.0 -0.9 -0.8 -0.7 -0.6 1762 1539 .17M 2061 2350 1949 1190 .1401 1635 1891 2177 2483 2090 2380 2700 .1423 1660 1922 .2206 2514 2033 2327 2643 2420 0559 0681 .0923 0985 .1170 .1370 1611 -1867 2140 2451 2776 3121 .3483 3859 4247 .1271 1492 1736 2005 2296 2611 2946 3300 3660 4052 4443 2236 2546 274) 2676 3015 -0.5 -0.4 3065 3446 3372 -0. -0.2 3821 4207 4602 3050 3400 3783 4160 4562 3745 4129 2810 3156 3520 3897 4206 4522 -0.1 -0.0 0.0 0.1 0.2 5000 5000 5398 5793 6179 .6554 6015 .7257 .7580 7881 8150 8413 1643 36:49 2901 3336 3707 4090 4400 ABSO 5120 .5517 5910 6299 CC64 7019 7357 7673 4960 S040 5438 5832 6217 6591 GOSO 7291 7611 4681 5319 5714 6103 4920 5080 5478 5871 6255 6628 6085 .7324 7642 7019 8212 3461 03 0.4 0.5 0.6 0.7 2077 3228 3594 3974 4364 4761 .5239 5636 6026 4406 .6772 7123 -7454 7764 4840 5160 5557 5048 5331 6700 7054 7389 7704 7005 1264 0508 1729 8925 2843 3192 3557 3936 4325 4721 5279 5095 6064 . .6800 .7157 7406 7794 3070 AB01 5199 5596 5987 6365 6736 -7085 7422 7734 6450 6844 7190 7517 7823 4641 5358 5753 6141 .6517 6879 7224 .7549 7052 7957 2023 08 0.6 1.0 7010 8115 .643 MO 8238 05 OVCE LES MES 8051 8315 LO554 1770 0962 9131 .8133 8309 .8021 3830 9015 3706 1.1 1.2 8686 886 3749 1944 BAGO 0907 3106 8.365 8590 8810 1997 9162 936 9129 9535 1.3 1.4 9002 9236 2009 9251 2012 9192 .9332 0452 040 9207 9345 0663 SOGE 9222 9357 0474 8790 8900 9147 9292 9418 9525 9115 9265 9994 sos 9370 9362 9177 9319 0441 9545 1.5 LG 10 9495 .9406 9515 9608 1.7 1625 9554 9541 9564 9649 9573 SES 9582 9654 9591 9021 9599 9075 9616 993 9633 20 1 6 -2.7 -2.6 -2.5 0035 0047 .0062 0082 0107 .0032 .0043 0034 .0045 0060 0080 .0104 0033 0044 0059 0031 0041 0055 0030 0040 0054 0028 0039 0051 0027 0037 0049 0026 .0036 0040 0057 .0078 -2.4 -2.3 -22 0073 0096 0102 000 0089 0066 0087 0054 .0084 0139 0136 0132 0170 0113 0071 0004 0122 0158 0202 -2.1 -2.0 0179 0228 0125 0162 0207 0174 .0222 0029 0079 0052 0069 0091 0119 0154 .0192 0250 0314 0302 085 0116 0150 0192 0110 0143 0183 0146 0183 0217 0944 0233 -1.9 -10 -1.7 0262 0329 0287 0359 04:46 OSAS 0307 0281 0351 0036 0537 0274 03:44 0427 0526 0239 0301 0375 0409 0505 -1.6 0294 0367 0455 0314 0075 0465 0643 0655 0793 0075 0099 0129 0166 .0212 0268 0336 0418 0516 0630 .0764 0910 1093 1292 1515 .1762 2033 2327 2643 -1.5 -14 -13 -12 0504 0778 0256 0322 0401 0495 0606 0735 oses 1056 1251 0721 0668 0806 0966 -1151 1357 0571 0694 .0559 0681 0618 0749 0901 . 1075 1271 0951 .1131 .1335 0869 .1038 .1210 -1.1 0934 1112 .1314 .1539 1788 2051 -10 11587 1841 1460 1711 -0.9 -0.0 -0.7 .1562 1814 2000 2380 2709 2119 2420 2743 1492 .1736 2005 2296 2611 1977 1685 1940 2236 2546 0582 .0708 0053 1020 1210 1423 1660 1922 2206 2514 28.9 3192 3557 3936 4325 2266 2578 -0.6 0838 0823 1003 0985 1190 1170 1401 1370 1635 1611 1804 1067 2177 2140 2483 2451 2010 2776 3156 3121 3520 3483 3897 3850 4286 4247 -0.5 JOBS 2356 2676 3015 3372 3745 4129 -0.A -0.3 -02 2912 3264 3532 4013 2946 3300 3669 4052 4443 2877 3228 35 3974 3050 3400 3783 4166 4562 4960 SOLO 5438 5832 2981 3336 3707 4090 43 4160 5120 5517 34.06 3821 4207 A602 5000 5000 5390 5793 4522 POTT -0.1 -0.0 0.0 0.1 0.2 1920 LONT 4681 5319 4540 SIGO 5557 59448 4761 5279 5636 6026 4721 5279 5675 SOGA 5910 5293 0.3 04 0.5 0.6 0.7 ET SOBO 5478 5871 6255 6628 6985 7324 7642 6179 6554 6915 .7257 -7580 6217 6591 6950 -7291 .7611 .7910 8166 M38 8665 MAGO 5406 .6772 7123 7454 7744 5199 5596 5967 6368 5736 7088 7422 7734 8023 8200 8531 5749 8044 ca 7157 7416 7794 5714 6103 SO 6544 7190 7517 7823 6331 6700 .7054 7389 .7704 7995 3264 3508 8729 1935 6664 7019 7357 7673 7967 3238 3485 6700 3907 0.0 0.9 1.0 -7919 8212 5461 8051 .8315 3594 1770 BLOG OVES 8106 BIGS A599 4641 5358 5750 6141 5517 6879 7224 7549 7052 8133 309 0621 3830 9015 9177 9319 0441 9545 9633 9706 9767 9817 9857 1.1 1.2 8686 3838 1810 0790 1980 CE 1997 -7881 8159 1413 BGL) BO 9032 9192 9332 9452 9554 0641 9713 9772 9021 1.3 1.4 S049 9207 9345 9463 3066 9222 9357 9474 9082 9236 9370 9.684 9009 9251 9382 9495 9115 9265 9394 1.5 1.6 910 9252 9418 9525 9162 9305 9129 9535 9505 9131 9279 9406 5515 SGOS SC 9750 900) 99573 9591 9671 1.7 10 1.9 2.0 2.1 N16 9693 9564 9640 9719 9778 0826 9582 9666 9732 070 9834 9735 9756 9726 9783 9810 9868 9793 5625 0600 9761 9012 9854 5000 9500 0678 9744 9798 92 9678 9906 9920 9946 LAS 9882 9864 sos 9920 8605 243 ZA 25 054 9911 9932 9913 9022 9940 9934 9951 9090 9916 9936 9952 9909 9931 994 9961 9941 9661 9893 9910 9935 9953 9965 9974 9981 9987 96.75 9904 9927 9945 9959 9969 9977 9984 165 9964 26 2.7 23 2.9 9972 9974 9955 9966 9975 9982 0087 9871 9901 9925 9943 9957 9958 9977 9983 0950 9991 9994 9996 9997 9956 9067 9976 9002 9057 9960 9970 9978 9054 1979 9063 9073 SONO 9986 9901 9904 5666 3.0 1.686 6255 5005 665 0666 1566 6000 9900 9990 9091 006 7665 7065 3.1 3.2 090 9900 9093 9995 1606 1666 5606 (565 9992 9994 9996 0606 S606 14566 9992 9995 9996 9997 5005 2665 9993 9995 9997 9990 SES 34 2655 9997 9997 9997 1.1 1.2 8686 8888 8749 8810 .8770 .8962 .6790 .0980 8944 8830 .9015 1.3 8643 8849 9032 9192 9332 9452 9066 8700 .8907 9082 .9236 9370 1997 9162 .9147 .9177 14 9222 9115 9265 .9292 9306 1.5 9357 9394 1.6 1665 8860 9049 9207 .9345 94463 9564 9649 9719 9778 9826 9474 9484 9505 1.7 9554 9641 1.0 1.0 8729 8925 2099 9251 9382 9495 9591 9671 9738 9793 9838 9875 9904 .9927 0045 9418 9525 9616 .9693 .9756 9808 9573 9656 9726 9783 9830 9868 9898 9922 9131 19279 .9406 .9515 9608 9686 .9750 9803 .98.46 .9881 9909 9931 9429 9535 9625 9599 .9761 9812 9854 9582 .9664 .9732 9788 9834 9071 .9901 .9925 9943 2.0 9319 9441 9545 9633 9706 .9767 9817 .9057 2.1 9713 9772 9821 9861 9893 9018 9938 .9850 S864 9884 9887 22 23 24 2.5 .9890 1896 9920 9940 9916 9936 9941 9911 9932 99.49 9962 99.48 9952 2.6 9599 9678 9744 9798 9842 9878 9906 9929 .9946 9960 9970 1997: 9964 9989 9992 9994 9996 9907 9953 9955 .9957 9959 9964 9966 9965 0974 .9972 9974 2.7 20 2.9 3.0 9975 9981 9982 9956 9967 9976 9982 9987 9901 9994 9995 9913 9934 9951 0063 9973 0980 9986 9000 9993 9995 9986 9981 9987 9990 9993 0987 9961 .9971 .9979 9985 .9989 9992 .9994 9996 9960 9977 .9983 9988 .9991 9994 9996 0997 9969 9977 9984 9988 9992 9994 9996 9997 3.1 3.2 3.3 3.4 9990 9991 9993 9979 9985 9989 .9992 9995 9996 9997 9995 9995 9999 9995 .9997 0990 9097 9997 9997 9996 0997 Required: (a)Based on this historical record, what is the approximate probability that your return on these bonds will be less than -3.6 percent in a given year? (Do not round intermediate calculations.) (Click to select) (b)What range of returns would you expect to see 95 percent of the time? (Do not round intermediate calculations.) (Click to select) V (c)What range would you expect to see 99 percent of the time? (Do not round intermediate calculations.) (Click to select)
