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Below are returns on the stock A and S&P500 index. All numbers are in decimals (-0.0222...

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Finance

Below are returns on the stock A and S&P500 index. Allnumbers are in decimals (-0.0222 is equivalent to -2.22%).

AS_P500
-0.02220.0032
-0.0048-0.0058
0.13330.0434
0.07650.1081
-0.0161-0.0121
0.12500.1400
0.01450.0368
-0.0475-0.0454
0.04300.0577
-0.0260-0.1374
0.00710.0064
0.02490.0186
0.08500.0215
-0.0624-0.0752
0.09330.0365
0.04560.0528
-0.0632-0.0131
0.04500.0009
0.02000.0017
0.02800.0985

Assuming normal distribution, what is the probability that thenext stock A return will be less than 0?

Please write an answer in decimals. For example, 12% would be0.12.
Also, round your answer to the second decimal.

Answer & Explanation Solved by verified expert
3.7 Ratings (609 Votes)

A B C D E F G H
2
3 A S_P500
4 -2.22% 0.32%
5 -0.48% -0.58%
6 13.33% 4.34%
7 7.65% 10.81%
8 -1.61% -1.21%
9 12.50% 14.00%
10 1.45% 3.68%
11 -4.75% -4.54%
12 4.30% 5.77%
13 -2.60% -13.74%
14 0.71% 0.64%
15 2.49% 1.86%
16 8.50% 2.15%
17 -6.24% -7.52%
18 9.33% 3.65%
19 4.56% 5.28%
20 -6.32% -1.31%
21 4.50% 0.09%
22 2.00% 0.17%
23 2.80% 9.85%
24 Mean Return 2.50% 1.69% =AVERAGE(E4:E23)
25 St. Deviation 5.73% 6.23% =STDEV.S(E4:E23)
26
27 Since the return of the stock is normally distributed, therefore
28 Norm.dist function of excel can be used to calculated the probability as follows:
29
30 Probability that the return is less than zero =P(X<0%)
31 0.33 =NORM.DIST(0%,D24,D25,TRUE)
32
33 Hence the probability that the return is less than zero is 0.33
34

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Transcribed Image Text

Below are returns on the stock A and S&P500 index. Allnumbers are in decimals (-0.0222 is equivalent to -2.22%).AS_P500-0.02220.0032-0.0048-0.00580.13330.04340.07650.1081-0.0161-0.01210.12500.14000.01450.0368-0.0475-0.04540.04300.0577-0.0260-0.13740.00710.00640.02490.01860.08500.0215-0.0624-0.07520.09330.03650.04560.0528-0.0632-0.01310.04500.00090.02000.00170.02800.0985Assuming normal distribution, what is the probability that thenext stock A return will be less than 0?Please write an answer in decimals. For example, 12% would be0.12.Also, round your answer to the second decimal.

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