Question

Given the following cumulative distribution of daily stock returns:

Actual Cumulative Cumulative Normal Return Value Frequency 0.10266 0.09414 0.08561 0.07709 0.06856 0.06003 0.05151 0.04298 0.03446 0.02593 0.0174 0.00888 0.00035 0.008175 0.016701 0.025227 0.033753 0.042279 0.050805 0.059331 0.067857 0.21% 0.21% 0.21% 0.21% 0.21% 0.42% 1.00% 3.14% 5.02% 11.09% 17.36% 30.33% 45.61% 60.46% 73.85% 84.94% 91.42% 96.03% 98.74% 99.16% 99.58% 100.00% 0.00% 0.00% 0.01% 0.03% 0.12% 0.37% 1.04% 2.58% 5.71% 11.26% 19.87% 31.58% 45.50% 60.01% 73.25% 83.82% 91.21% 95.73% 98.15% 99.29% 99.76% 99.76% 0 0 5 9 29 30 62 73 71 64 53 31 13 0.068

What is the actual probability (based on the actual cumulative distribution) that daily return will be between -1.74% and +2.5227?

a. 17.36%

b. 84.94%

c. 67.58%

d. None of the above

Answer 1

Answer:

Calculation of actual probability based on cumilative distrudistri

The returns in between -1.74%and +2.5227

That is  

Return value . Actual cumulative

- 0.0174. 17.36%

- 0.00888 . 30.36%

- 0.00035 . 45.61%

+0.008175 . 60.46%

+0.016701. 73.85%

+0.025227. 84.94%

In between -0.0174 and +0.025227 , the cumulative distribution = 84.94% - 17.36%( before - 0.0174 )

=67.58%

Actual probability = 67.58/100×100=67.58%