Investment A has expected return of 25mil and investment B has expected return of 5 mil. The SD from A is 10mil and for B is 30mil. If you assume returns follow a normal distribution which investment would give a better chance of getting at least a 40 million return?
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standard deviation problem
- Thread starter kalee
- Start date
D
Deleted member 4993
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kalee said:Investment A has expected return of 25mil and investment B has expected return of 5 mil. The SD from A is 10mil and for B is 30mil. If you assume returns follow a normal distribution which investment would give a better chance of getting at least a 40 million return?
Here you need to calculate z-score and use look-up tables.
Please share your work with us, indicating exactly where you are stuck - so that we may know where to begin to help you.
D
Deleted member 4993
Guest
kalee said:I figured the avg for both which is 15
for A 40-15/10=2.5
for B 40-15/30= 0.83
So what probabilities do these z-scores relate to - according to the look-up table?
Remember you are looking for at least 40 million.