Question
Using Probability Distributions: suppose the returns on long-term corporate bonds and T-bills are normally distributed. Based on the historical record, use the NORMDIST function in
Using Probability Distributions: suppose the returns on long-term corporate bonds and T-bills are normally distributed. Based on the historical record, 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 9 percent? Less than 0 percent? b) What is the probability that in any given year, the return on T-bills will be greater than 9 percent? Less than 0 percent? c) In 1979, the return on long-term corporate bonds was -4.18 percent. How likely is it that such a low return will recur at some point in the future? T-bills had a return of 12 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?
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