Assume the returns from holding small-company stocks are normally distributed. A
ID: 2787723 • Letter: A
Question
Assume the returns from holding small-company stocks are normally distributed. Also assume the average annual return for holding the small-company stocks for a period of time was 16 percent and the standard deviation of those stocks for the period was 33.9 percent. Use the NORMDIST function in Excel® to answer the following questions. What is the approximate probability that your money will double in value in a single year? (Do not round intermediate calculations and enter your answer as a percent rounded to 3 decimal places, e.g., 32.161.) Probability % What is the approximate probability that your money will triple in value in a single year? (Do not round intermediate calculations and enter your answer as a percent rounded to 8 decimal places, e.g., 32.16161616.) Probability %
Explanation / Answer
Money doubling is returns greater than or equal to 100%..1-NORMDIST(100,16,33.9,TRUE)=
Money tripling is returns greater than or equal to 200%..1-NORMDIST(200,16,33.9,TRUE)=
0.660%