Assuming that the rates of return associated with a given asset investment are normally distributed; that the expected return, r¯, is 18.9%; and that the coefficient of variation, CV, is 0.75; answer the following questions:
a. Find the standard deviation of returns, σr.
b. Calculate the range of expected return outcomes associated with the following probabilities of occurrence:
(1) 68%,
(2) 95%,
(3) 99%.
c. Draw the probability distribution associated with your findings in parts a and b.