The annual return of a well-known mutual fund has historically had a mean of about 10%...
The annual return of a well-known mutual fund has historically had a mean of about 10% and a standard deviation of 39%. Suppose the return for the following year follows a normal distribution, with the historical mean and standard deviation.
a. What is the probability that you will lose money in the next year by investing in this fund?
b. What is the probability that you will earn at least 25% in the next year?
(no excel)
Homework Answers
Hence, 0.3988 is the probability that there will be lose of money in the next year.
Hence, 0.3503 is the probability that there will be at least 25% profit in the next year. Probabilities are from z-table.
Please comment if any doubt. Thank you.
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The annual return of a well-known mutual fund has historically
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