Suppose the returns on long-term corporate bonds and T-bills are normally distributed. Assume for a certain time period, long-term corporate bonds had an average return of 6.9% and a standard deviation of 9.9%. For the same period, T-bills had an average return of 5.4% and a standard deviation of 4.1%. Use the NORMDIST function in Excel to answer the following questions: a. What is the probability that in any given year, the return on long-term corporate bonds will be greater than 10 percent? Less than 0 percent? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the probability that in any given year, the return on T-bills will be greater than 10 percent? Less than 0 percent? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) c. In one year, the return on long-term corporate bonds was -5.6 percent. How likely is it that such a low return will recur at some point in the future? T-bills had a return of 12.02 percent in this same year. How likely is it that such a high return on T-bills will recur at some point in the future? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
icon
Related questions
Question

Pls correct step by step explanation 

Suppose the returns on long-term
corporate bonds and T-bills are normally
distributed. Assume for a certain time
period, long-term corporate bonds had an
average return of 6.9% and a standard
deviation of 9.9%. For the same period,
T-bills had an average return of 5.4% and a
standard deviation of 4.1%. Use the
NORMDIST function in Excel to answer the
following questions:
a. What is the probability that in any
given year, the return on long-term
corporate bonds will be greater than 10
percent? Less than 0 percent? (Do not
round intermediate calculations and enter
your answers as a percent rounded to 2
decimal places, e.g., 32.16.)
b. What is the probability that in any
given year, the return on T-bills will be
greater than 10 percent? Less than 0
percent? (Do not round intermediate
calculations and enter your answers as a
percent rounded to 2 decimal places, e.g.,
32.16.)
c. In one year, the return on long-term
corporate bonds was -5.6 percent. How
likely is it that such a low return will recur
at some point in the future? T-bills had a
return of 12.02 percent in this same year.
How likely is it that such a high return on
T-bills will recur at some point in the
future? (Do not round intermediate
calculations and enter your answers as a
percent rounded to 2 decimal places, e.g.,
32.16.)
Transcribed Image Text:Suppose the returns on long-term corporate bonds and T-bills are normally distributed. Assume for a certain time period, long-term corporate bonds had an average return of 6.9% and a standard deviation of 9.9%. For the same period, T-bills had an average return of 5.4% and a standard deviation of 4.1%. Use the NORMDIST function in Excel to answer the following questions: a. What is the probability that in any given year, the return on long-term corporate bonds will be greater than 10 percent? Less than 0 percent? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the probability that in any given year, the return on T-bills will be greater than 10 percent? Less than 0 percent? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) c. In one year, the return on long-term corporate bonds was -5.6 percent. How likely is it that such a low return will recur at some point in the future? T-bills had a return of 12.02 percent in this same year. How likely is it that such a high return on T-bills will recur at some point in the future? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 5 steps with 49 images

Blurred answer
Recommended textbooks for you
MATLAB: An Introduction with Applications
MATLAB: An Introduction with Applications
Statistics
ISBN:
9781119256830
Author:
Amos Gilat
Publisher:
John Wiley & Sons Inc
Probability and Statistics for Engineering and th…
Probability and Statistics for Engineering and th…
Statistics
ISBN:
9781305251809
Author:
Jay L. Devore
Publisher:
Cengage Learning
Statistics for The Behavioral Sciences (MindTap C…
Statistics for The Behavioral Sciences (MindTap C…
Statistics
ISBN:
9781305504912
Author:
Frederick J Gravetter, Larry B. Wallnau
Publisher:
Cengage Learning
Elementary Statistics: Picturing the World (7th E…
Elementary Statistics: Picturing the World (7th E…
Statistics
ISBN:
9780134683416
Author:
Ron Larson, Betsy Farber
Publisher:
PEARSON
The Basic Practice of Statistics
The Basic Practice of Statistics
Statistics
ISBN:
9781319042578
Author:
David S. Moore, William I. Notz, Michael A. Fligner
Publisher:
W. H. Freeman
Introduction to the Practice of Statistics
Introduction to the Practice of Statistics
Statistics
ISBN:
9781319013387
Author:
David S. Moore, George P. McCabe, Bruce A. Craig
Publisher:
W. H. Freeman