Question: Question 7.49

The article mentioned in Problem 7.48 reported that Treasury bonds had a mean return of -9.3% in 2009. Assume that the returns for the Treasury bonds were distributed as a normal random variable, with a mean of -9.3 and a standard deviation of 10. If you select an individual Treasury bond from this population, what is the probability that is would have a return

a. Less then 0 (i.e., a loss)?

b. Between -10 and -20?

c. Greater than 5?

If you selected a random sample of four Treasury bonds from this population, what is the probability that the sample would have a mean return:

d. Less than 0 – that is, a loss?

e. Between -10 and -20?

f. Greater than 5?

g. Compare your results in parts (d) through (f) to those in (a) through (c).