Question

Andrew plans to retire in 45 years. He plans to invest part of his retirement funds in stocks, so he seeks out information on past returns. He learns that over the years, the annual returns on U.S. common stocks had mean 13.3% and standard deviation 19.0%. The distribution of annual returns on common stocks is roughly symmetric, so the mean return over even a moderate number of years is close to Normal. (Round your answers to four decimal places.) (a) What is the probability (assuming that the past pattern of variation continues) that the mean annual return on common stocks over the next 45 years will exceed 12%? (b) What is the probability that the mean return will be less than 5%?

          Andrew plans to retire in 45 years. He plans to invest
part of his retirement funds in stocks, so he seeks out information
on past returns. He learns that over the years, the annual returns
on U.S. common stocks had mean 13.3% and standard
deviation 19.0%. The distribution of annual returns on common
stocks is roughly symmetric, so the mean return over even a
moderate number of years is close to Normal. (Round your answers to
four decimal places.) 
(a) What is the probability (assuming that the past pattern
of variation continues) that the mean annual return on common
stocks over the next 45 years will exceed 12%?
(b) What is the probability that the mean return will be
less than 5%?

Added by Natalia J.

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