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the Capital Asset Pricing Model is a financial model that assumes returns on a portfolio are...

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Basic Math

the Capital Asset Pricing Model is a financial model thatassumes returns on a portfolio are normally distributed. Suppose aportfolio has an average annual return of 14.7% (i.e. an averagegain of 14.7%) with a standard deviation of 33%. A return of 0%means the value of the portfolio doesn't change, a negative returnmeans that the portfolio loses money, and a positive return meansthat the portfolio gains money.

a.) What percent of years does this portfolio lose money, i.e.have a return less than 0%

b.) What is the cutoff for the highest 15% of annual returnswith this portfolio

please shiw me how to out this on a TI83 caculator trying tolearn it :)

Answer & Explanation Solved by verified expert
4.3 Ratings (691 Votes)
Part aLet X be the random variable follows normal distribution withmean 147 and standard deviation 33PXUsing Excel    See Answer
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