statistics

An investment broker reports that the yearly returns on common stocks are approximately normally distributed with a mean return of 12.4 percent and a standard deviation of 20.6 percent. On the other hand, the firm reports that the yearly returns on tax-free municipal bonds are approximately normally distributed with a mean return of 5.2 percent and a standard deviation of 8.6 percent.

(a)

Use the investment broker’s report to estimate the maximum yearly return that might be obtained by investing in tax-free municipal bonds. (Round your answer to the nearest whole percent.)

Maximum yearly return 32%

(b)

Find the probability that the yearly return obtained by investing in common stocks will be higher than the maximum yearly return that might be obtained by investing in tax-free municipal bonds. (Round your answer to 4 decimal places.)

  1. 👍 0
  2. 👎 0
  3. 👁 85

Respond to this Question

First Name

Your Response

Similar Questions

  1. statistics

    An investment broker reports that the yearly returns on common stocks are approximately normally distributed with a mean return of 12.4 percent and a standard deviation of 20.6 percent. On the other hand, the firm reports that the

    asked by Anonymous on February 19, 2012
  2. stats

    An investment broker reports that the yearly returns on common stocks are approximately normally distributed with a mean return of 12.4 percent and a standard deviation of 20.6 percent. On the other hand, the firm reports that the

    asked by Help on October 3, 2013
  3. Statistics

    An investment broker reports that yearly returns on common stocks are normally distributed with a mean of 12.4 percent and a standard deviation of 20.6 percent. (Round all k amounts to three decimal places. A negative sign should

    asked by Michael on October 10, 2011
  4. Statistics

    Suppose that the percentage returns for a given year for all stocks listed on the New York Stock Exchange are approximately normally distributed with a mean of 12.4 percent and a standard deviation of 20.6 percent. Consider

    asked by Mary on June 7, 2010
  5. statistics

    Suppose that the percentage returns for a given year for all stocks listed on the New York Stock Exchange are approximately normally distributed with a mean of 12.4 percent and a standard deviation of 20.6 percent. Consider

    asked by Amy on August 31, 2009
  6. statistics

    Suppose that the percentage returns for a given year for all stocks listed on the new york stock exchange are approximately normally distributed with a mean of 12.4 percent and a standard deviation of 20.6 percent. Consider

    asked by ileana on November 9, 2009
  7. Business Statistics

    1.  Suppose that the mean of the annual return for common stocks from 1950 to 2012 was 9.4%, and the standard deviation of the annual return was 17.5%.  Suppose also that during the same 62-year time span, the mean of the annual

    asked by Michelle on March 6, 2013
  8. Statistics

    The yearly returns of a stock are normally distributed with a mean of 5.1% and standard deviation of 2.7%. Find the probability of a yearly return being greater than 6%.

    asked by Rem on April 24, 2013
  9. Math

    The yearly returns of a stock are normally distributed with a mean of 5.1% and standard deviation of 2.7%. Find the probability of a yearly return being greater than 6%.

    asked by Nick on April 15, 2014
  10. Math

    The management of a private investment club has a fund of $114,000 earmarked for investment in stocks. To arrive at an acceptable overall level of risk, the stocks that management is considering have been classified into three

    asked by Rachel on September 10, 2012

More Similar Questions