Major stock markets have indicated strong gains in the last 12months. The one year return for the S&P 500, a group of500 large companie, was approximately +27%. The one yearreturn for the Russell 2000, a group of 2000 small companies wasapproximately +52%. Historically the one year return areapproximately normal. The standard deviation in the S&P500 returns is approximately 20% and in the Russell 2000 thestandard deviation is approximately 35%
a. what is the probability that a stock in the S&P500 gained 30% or more in the last year. Gained 60% more in thelast year.
b. What is the probability that a stock in the S&P 500lost money in the last year? Lost 30% or more?
c. Repeat A and b for a stock in the Russell 2000.