Answered: We have been told that in history, the…

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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We have been told that in history, the one-year returns follow approximately the normal distribution. Given that the one-year return for the S&P 500 was +27% (that is, 0.27) and its S.D (standard deviation) is 20% (that is, 0.2). (i) Determine the probability that a stock in the S&P 500 gained 30% or more last yearrrrr? (ii) DEtermine the probability that a stock in the S&P 500 lost 10% or more last year? (iii) Determine the probability that a stock in the S & P lost 14% or more last year?

Features Features Normal distribution is characterized by two parameters, mean (µ) and standard deviation (σ). When graphed, the mean represents the center of the bell curve and the graph is perfectly symmetric about the center. The mean, median, and mode are all equal for a normal distribution. The standard deviation measures the data's spread from the center. The higher the standard deviation, the more the data is spread out and the flatter the bell curve looks. Variance is another commonly used measure of the spread of the distribution and is equal to the square of the standard deviation.

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