. A portfolio has an expected mean return of 8% and standard deviation of 14%. The probability that its return falls between 8% and 11% is closest to:
a. 8.5%.
b. 14.8%.
c. 58.3%
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Option A. Attached image along with answer.
thank you very much.best explaination.
Z-stat = 11 – 8 / 14 = 0.2143 and we get the probability as 58.32%. But this is cumulative probability till z value of 0.2143.
So we will have to remove the left tail probability from this. Since the distribution is symmetrical, probability is same in both the regions i.e. 50% each.
Therefore, 58.32 – 50 = 8.32% answer. So answer is Option A, the closest option.
thank you very much ishaan. very nice explanation
thank you very much ishaan. very nice explanation
How did you got the probability of 58.32%?