--%>
Assignment Help - homework help

Determine normal distribution with mean & standard deviation

How are normal distributions with mean and standard deviation in a given period shown?

E

Expert

Verified

In Modern Portfolio Theory the return on individual assets are shown by normal distributions with specific mean and standard deviation over a given period. Therefore, one asset might have an annualized expected return of 5 percent and an annualized standard deviation or volatility of 15%. The other might have an expected return of −2 percent and a volatility of 10 percent. Before Markowitz, one would only have invested in the first stock, or maybe sold the second stock short.

   Related Questions in Financial Management

  • Q : Considerations of theory of comparative

    What considerations might restrict the extent on which the theory of comparative advantage is realistic?Originally the theory of comparative advantage was advanced by the nineteenth century economist David Ricardo as an explanation for why natio

    		•
  • Q : Working capital affect the incremental

    How and why does working capital affect the incremental cash flow estimation for a proposed large capital budgeting project?

    		•
  • Q : Reach a tutor for financial management

    how to reach tutor for financial management problems?

    		•
  • Q : Why is Crash Metrics good risk tool Why

    Why is Crash Metrics good risk tool?

    		•
  • Q : Illustrates an example of Monte Carlo

    Illustrates an example of Monte Carlo Simulation?

    		•
  • Q : Increased common stock dividend sends

    Elaborate: The increased common stock cash dividend can send a signal to the common stockholders.

    		•
  • Q : Describe long position in a futures

    Describe long position in a futures (or forward) contract?A futures (or forward) contract is a vehicle for purchasing or selling a stated amount of foreign exchange at a stated price per unit at a particular time in the future. If the long hold

    		•
  • Q : Explain differences between foreign

    Explain the differences between foreign bonds & Eurobonds. Also describe why Eurobonds make up the lions share of the international bond market.The two segments of the international bond market are following:  foreign bonds & Eurobo

    		•
  • Q : Find QSD and set up

    Company A is a AAA-rated firm wanting to issue five-year FRNs. It determines that it can issue FRNs at six-month LIBOR + 1/8 percent or at the six-month Treasury-bill rate + ½ percent. Specified its asset structure, LIBOR is the preferred index. Comp

    		•
  • Q : Explain the term TGARCH as of the

    Explain the term TGARCH as of the GARCH’s family. Answer: TGARCH: It is threshold GARCH. This is the same

    		•