Question

suppose the returns on long term corporate bonds and T-bills are normally distributed. Based on the values below answer the following questions: what is the probability that in any given year, the return on long-term corporate bonds will be greater than 10 percent? long term corporate bonds average return= 6.30%

Answer 1

32.35% ( the probability that in any given year, the return on long-term corporate bonds will be greater than 10 percent )

Step-by-step explanation:

Given data for long-term corporate bonds

Standard deviation : 8.3%

mean = 6.2%

To calculate the probability that in any given year, the return on long-term corporate bonds will be greater than 10 percent ( USING THE NORM-DIST FUNCTION )

P( x > 10% ) = 1 - P(x<10%) = 1 - NORM-DIST (10,6.2,8.3,TRUE ) = 0.3235

= 32.35%

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