Question
The average return for large-cap domestic stock funds over the three years 2009-2011 was 14.7%. Assume the three-year returns were normally distributed across funds with
The average return for large-cap domestic stock funds over the three years 2009-2011 was 14.7%. Assume the three-year returns were normally distributed across funds with a standard deviation of 4.2%. Use Table 1 in Appendix B.
a.What is the probability an individual large-cap domestic stock fund had a three-year return of at least 20% (to 4 decimals)?
b.What is the probability an individual large-cap domestic stock fund had a three-year return of 10% or less (to 4 decimals)?
c.How big does the return have to be to put a domestic stock fund in the top 10% for the three-year period (to 2 decimals)?
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