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Question
You are given the following probability distribution for XYZ common stock's returns during the next year, which are assumed to be normally distributed. Show all work below, and complete the following:| Return | Probability |
| 12% | 20% |
| 16% | 60% |
| 20% | 20% |
a. Calculate the standard deviation of the returns, and round to the nearest one-half percent.
b. Draw a graphical representation of XYZ's normal distribution below (ye old bell-shaped curve). LABEL THE AXES OF THE GRAPH OR THE FOLLOWING RESULTS WILL BE MEANINGLESS. Using your result in part A for the standard deviation (rounded to the nearest one-half percent)explain and indicate on the graph, the probability that XYZ will return more than 13.5%, assuming a normal distribution.
Answer
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