document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=202575>Question 202575</A>: <I><SPAN STYLE=\"word-break: break-all;\"> According to Investment Digest (\"Diversification and the Risk/Reward Relationship\", Winter 1994, 1-3), the mean of the annual return for common stocks from 1926 to 1992 was 12.4%, and the standard deviation of the annual return was 20.6%. The article claims that the distributions of annual returns for both common stocks is approximately bell-shaped and symmetric.. Assume that the distribution is normally distributed with a mean and standard deviation given above. \r<BR>\n" );
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document.write( "Find the probability that the return for common stocks will be\r<BR>\n" );
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document.write( "a.	Greater than 0%<BR>\n" );
document.write( "b.	Greater than 10%<BR>\n" );
document.write( "c.	Greater than 20%<BR>\n" );
document.write( "d.	Less than -10%<BR>\n" );
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document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #152799 by </B><A HREF=/tutors/aboutme.mpl?userid=stanbon><B>stanbon(75887)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=stanbon><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/images/nopicture.jpg><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=152799\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> According to Investment Digest (\"Diversification and the Risk/Reward Relationship\", Winter 1994, 1-3), the mean of the annual return for common stocks from 1926 to 1992 was 12.4%, and the standard deviation of the annual return was 20.6%. The article claims that the distributions of annual returns for both common stocks is approximately bell-shaped and symmetric.. Assume that the distribution is normally distributed with a mean and standard deviation given above. <BR>\n" );
document.write( "Find the probability that the return for common stocks will be <BR>\n" );
document.write( "a. Greater than 0%<BR>\n" );
document.write( "z(0) = (0-0.124)/0.206 = -0.60194...<BR>\n" );
document.write( "P(x>0) = P(z>-0.60194...) = 0.7264<BR>\n" );
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document.write( "b. Greater than 10%<BR>\n" );
document.write( "Same procedure:<BR>\n" );
document.write( "Ans: 0.5464<BR>\n" );
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document.write( "c. Greater than 20%<BR>\n" );
document.write( "Ans: 0.3561<BR>\n" );
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document.write( "d. Less than -10%<BR>\n" );
document.write( "Ans: 0.1280<BR>\n" );
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document.write( "Cheers,<BR>\n" );
document.write( "Stan H.<BR>\n" );
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