Math

StatisticsQ&A Library. The average return for large -cap domestic stock funds over the 3 years 2009-2011 was 14.4% (AAII Journal, February 2012). Assume the 3 year-year returns were normally distributed across funds with a standard deviation of 4.4%.a. What is the probability an individual large cap domestic stock fund had a 3 year return of at least 20%?b. What is the probability an individual large cap domestic stock fund had a 3- year return of 10% or less? c. How big does the return have to be to put a domestic stock fund in the top 10% for the 3- year period?Question

Asked Jan 28, 2020

85 views

. The average return for large -cap domestic stock funds over the 3 years 2009-2011 was 14.4% (AAII Journal, February 2012). Assume the 3 year-year returns were normally distributed across funds with a standard deviation of 4.4%.

a. What is the probability an individual large cap domestic stock fund had a 3 year return of at least 20%?

b. What is the probability an individual large cap domestic stock fund had a 3- year return of 10% or less?

c. How big does the return have to be to put a domestic stock fund in the top 10% for the 3- year period?

Step 1

(a)

The large-cap domestic stock funds over the three years are normally distributed with mean 14.4% and standard deviation 4.4%.

The probability that the three years return at least 20% is,

P(x≥20)

**Software Procedure:**

Step-by-step procedure to obtain the probability value using the Excel:

- Use “
**=Norm.Dist(x, Mean, Standard deviation, Cumulative)**”. - Type “
**=Norm.Dist(20,14.4,4.4,TRUE)**”.

Output using the Excel is given below:

Step 2

From the output,

Step 3

Thus, the value of P(x≥20) is 0.1016.

(b)

The probability that the three years return is less than or equal to 10% is,

P(x≤10)

**Software Procedure:**

Step-by-step procedure to obtain the probability value using the Excel:

- Use “
**=Norm.D...**

Tagged in

Find answers to questions asked by student like you

Show more Q&A

Q: Suppose that you want to perform a hypothesis test based on a simple random paired sample to compare...

A: a)Requirements for a paired t-test:The samples must be paired sample and drawn randomly from normall...

Q: State whether each of the following is true or false and explain your answer. a. The estimate of the...

A: (a)Justification:

Q: Regarding a scatterplot matrix: a. Identify two of its uses. b. What property should the scatterplot...

A: a)Scatterplot matrix:A scatterplot matrix is defined as an array of scatterplots of the response var...

Q: Requirements Twelve different video games showing alcohol use were observed. The duration times of a...

A: For testing the claim about the population mean, the requirements are given below.Requirements:The s...

Q: Using the Fa-notation, identify the F-value having area 0.975 to its left.

A: Click to see the answer

Q: Discuss the basic strategy for performing a hypothesis test to compare the means of two populations,...

A: In two sample t test, there are two independent large samples taken from two different populations.

Q: How do I Compute the Pearson product Moment Correlation coefficient for the following variables: Yea...

A: Correlation coefficient - r:The Karl Pearson’s product-moment correlation coefficient or simply, the...

Q: 4. As part of the study described in Problem 6, investigators wanted to assess the accuracy of self-...

A: Given that, The data are shown in the following table

Q: In each of Exercises, we have provided a sample standard deviation and sample size. In each case, us...

A: a).The sample standard deviation and the sample size are, s = 5 and n = 20 respectively. The signifi...