(Solution) - Suppose the returns on long term corporate bonds and T bills are -(2025 Original AI-Free Solution)
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Suppose the returns on long-term corporate bonds and T-bills are normally distributed. Based on the historical record, use the NORMDIST Function in Excel to answer the following questions;
(a) What is the probability that in any given year, the return on long-term corporate bonds will be greater than 10 percent? Less than 0 percent?
(b) What is the probability that in any given year, the return on T-bills will be greater than 10 percent? Less than 0 percent?
(c) In 1979, the return on long-term corporate bonds was -4.18 percent. How likely is it that such a low return will recur at some point in the future? T-bills had a return of 10.32 percent in this same year. How likely is it that such a high return on T-bolls will recur at some point in the future?