Suppose the average return on Asset A is 6.7 percent and the standard deviation is 7.9 percent and the average return and standard deviation on Asset B are 3.8 percent and 3.4 percent, respectively. Further assume that the returns are normally distributed. Use the NORMDIST function in Excel® to answer the following questions.

a.

What is the probability that in any given year, the return on Assets A will be greater than 9 percent? Less than 0 percent? (Do not round intermediate calculations and round your answers to 2 decimal places. (e.g., 32.16))

Greater than 9 percent

%

Less than 0 percent

%

b.

What is the probability that in any given year, the return on Asset B will be greater than 9 percent? Less than 0 percent? (Do not round intermediate calculations and round your answers to 2 decimal places. (e.g., 32.16))

Greater than 9 percent

%

Less than 0 percent

%

c-1

In a particular year, the return on Asset A was −4.34 percent. How likely is it that such a low return will recur at some point in the future? (Do not round intermediate calculations and round your answers to 2 decimal places. (e.g., 32.16))

Probability

%

c-2

Asset B had a return of 10.50 percent in this same year. How likely is it that such a high return on Asset B will recur at some point in the future? (Do not round intermediate calculations and round your answers to 2 decimal places. (e.g., 32.16))

Probability

%