The major stock market indexes had strong results in 2014. Themean one-year return for stocks in the S&P 500, a group of 500very large companies was +11.4%. The mean one year return for theNASDAQ, a group of 3200 small and medium-sized companies was+13.4%. Historically, the one-year returns are approximatelynormal, the standard deviation in the S&P 500 is approximately20% and the standard deviation in NASDAQ is approximately 30%.
- What is the probability that a stock in the S&P 500 gainedvalue in 2014?
- What is the probability that a stock in the S&P 500 gained10% or more in 2014?
- What is the probability that a stock in the S&P 500 lost20% or more in 2014?
- What is the probability that a stock in the S&P 500 lost30% or more in 2014?
- Repeat (a) through (d) for a stock in the NASDAQ.
- Write a short report on your findings Be sure to include adiscussion on the risks associated with a large standard deviation.How would you use the findings to provide advice on investing inthe S&P 500 or NASDAQ stock market?
Please explain how you get the answer to x (or Z) step bystep
