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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 6.3 percent and a standard deviation of 9.6 percent. For the same period, T-bills had an average return of 4.8 percent and a standard deviation of 3.8 percent. 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 O percent? Note: 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? Note: 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 percent. How likely is it that such a low return will recur at some point in the future? T-bills had a return of 11.62 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? Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. a. Probability of return greater than 10 percent Probability of return less than 0 percent b. Probability of return greater than 10 percent Probability of return less than 0 percent c. Probability of return less than -5 percent Probability of return greater than 11.62 percent 65.00 % % % % % %

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 6.3 percent and a standard deviation of 9.6 percent. For the same period, T-bills had an average return of 4.8 percent and a standard deviation of 3.8 percent. 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 O percent? Note: 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? Note: 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 percent. How likely is it that such a low return will recur at some point in the future? T-bills had a return of 11.62 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? Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. a. Probability of return greater than 10 percent Probability of return less than 0 percent b. Probability of return greater than 10 percent Probability of return less than 0 percent c. Probability of return less than -5 percent Probability of return greater than 11.62 percent 65.00 % % % % % %

A First Course in Probability (10th Edition)
A First Course in Probability (10th Edition)
10th Edition
ISBN:9780134753119
Author:Sheldon Ross
Publisher:Sheldon Ross
Chapter1: Combinatorial Analysis
Section: Chapter Questions
Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...
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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 6.3 percent and a standard deviation of 9.6 percent. For the same period, T-bills had an average return of 4.8 percent and a standard deviation of 3.8 percent. 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 O percent? Note: 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? Note: 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 percent. How likely is it that such a low return will recur at some point in the future? T-bills had a return of 11.62 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? Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. a. Probability of return greater than 10 percent Probability of return less than 0 percent b. Probability of return greater than 10 percent Probability of return less than 0 percent c. Probability of return less than -5 percent Probability of return greater than 11.62 percent 65.00 % do % % %
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 6.3 percent and a standard deviation of 9.6 percent. For the same period, T-bills had an average return of 4.8 percent and a standard deviation of 3.8 percent. 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 O percent? Note: 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? Note: 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 percent. How likely is it that such a low return will recur at some point in the future? T-bills had a return of 11.62 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? Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. a. Probability of return greater than 10 percent Probability of return less than 0 percent b. Probability of return greater than 10 percent Probability of return less than 0 percent c. Probability of return less than -5 percent Probability of return greater than 11.62 percent 65.00 % do % % %
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