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A private equity firm is evaluating two alternative investments. Although the returns are random, each investment's return can be described using a normal distribution. The first investment has a mean return of $2,250,000 with a standard deviation of $125,000. The second investment has a mean return of $2,525,000 with a standard deviation of $600,000. Complete parts a through c below. a. How likely is it that the first investment will return $2,000,000 or less? The probability is 0.0228 (Round to four decimal places as needed.) b. How likely is it that the second investment will return $2,000,000 or less? The probability is 0.1908. (Round to four decimal places as needed.) c. If the firm would like to limit the probability of a return being less than $1,900,000, which investment should it make? with the first investment and The probability of a return being less than $1,900,000 is (Round to four decimal places as needed.) with the second investment, so the firm should make the investment.

A private equity firm is evaluating two alternative investments. Although the returns are random, each investment's return can be described using a normal distribution. The first investment has a mean return of $2,250,000 with a standard deviation of $125,000. The second investment has a mean return of $2,525,000 with a standard deviation of $600,000. Complete parts a through c below. a. How likely is it that the first investment will return $2,000,000 or less? The probability is 0.0228 (Round to four decimal places as needed.) b. How likely is it that the second investment will return $2,000,000 or less? The probability is 0.1908. (Round to four decimal places as needed.) c. If the firm would like to limit the probability of a return being less than $1,900,000, which investment should it make? with the first investment and The probability of a return being less than $1,900,000 is (Round to four decimal places as needed.) with the second investment, so the firm should make the investment.

MATLAB: An Introduction with Applications
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
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A private equity firm is evaluating two alternative investments. Although the returns are random, each investment's return can be described using a normal distribution. The first investment has a mean return of $2,250,000 with a standard deviation of $125,000. The second investment has a mean return of $2,525,000 with a standard deviation of $600,000. Complete parts a through c below. a. How likely it that the first investment will return $2,000,000 or less? The probability is 0.0228. (Round to four decimal places as needed.) b. How likely is it that the second investment will return $2,000,000 or less? The probability is 0.1908. (Round to four decimal places as needed.) c. If the firm would like to limit the probability of a return being less than $1,900,000, which investment should it make? G The probability of a return being less than $1,900,000 is with the first investment and with the second investment, so the firm should make the (Round to four decimal places as needed.) investment.
Transcribed Image Text:A private equity firm is evaluating two alternative investments. Although the returns are random, each investment's return can be described using a normal distribution. The first investment has a mean return of $2,250,000 with a standard deviation of $125,000. The second investment has a mean return of $2,525,000 with a standard deviation of $600,000. Complete parts a through c below. a. How likely it that the first investment will return $2,000,000 or less? The probability is 0.0228. (Round to four decimal places as needed.) b. How likely is it that the second investment will return $2,000,000 or less? The probability is 0.1908. (Round to four decimal places as needed.) c. If the firm would like to limit the probability of a return being less than $1,900,000, which investment should it make? G The probability of a return being less than $1,900,000 is with the first investment and with the second investment, so the firm should make the (Round to four decimal places as needed.) investment.
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