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Portfolio returns. The Capital Asset Pricing Model is a financial model that assumes returns on a...

Portfolio returns. The Capital Asset Pricing Model is a financial model that assumes returns on a portfolio are normally distributed. Suppose a portfolio has an average annual return of 10.9% (i.e. an average gain of 10.9%) with a standard deviation of 24%. A return of 0% means the value of the portfolio doesn't change, a negative return means that the portfolio loses money, and a positive return means that the portfolio gains money. Round all answers to 4 decimal places.

a. What percent of years does this portfolio lose money, i.e. have a return less than 0%?

b. What is the cutoff for the highest 24% of annual returns with this portfolio?

math   Statistics-And-Probability   
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