Suppose you own a risky asset with an expected return of 18.2 percent and a standard deviation of 27.2 percent.If the returns are normally distributed,the approximate probability of losing 9 percent or more in a single year is ________ percent.
A).26
B)4.56
C)15.87
D)31.74
E)2.28

Question

Quizplus · Accepted Answer

Lower point of 68.26% probability range = 18.2% − 27.2% = −9%
Approximate probability of losing 15 percent or more = (100% − 68.26%)/ 2 = 15.87%

Suppose You Own a Risky Asset with an Expected Return