Answered: You make an investment. Assume that…

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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Question

. You make an investment. Assume that annual returns are normally distributed with a mean return of .05 per year and a standard deviation of .20. What is the probability of (a) a positive annual return? (b) What is the probability of an annual return greater than .12? (c) What is the probability of a return of –.06 or less? (d) Suppose there are 250 trading days in a year and the return on any day is independent of the return on any other day. What is the probability of a positive return on any given day?

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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