You are introduced to an investment that has an expected return of 20% equal to the standard deviation of the distribution of returns.What is the probability that the investment will have a return less than 20% in the first year? Assume a normal distribution.

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Quizplus · Accepted Answer

In a normal distribution, the mean (expected return in this case) is the midpoint of the distribution. Therefore, 50% of the distribution lies below the mean. Since the expected return is 20%, there is a 50% probability that the return will be less than 20%.

You Are Introduced to an Investment That Has an Expected