1. You observe a portfolio for five years and determine that its average return is 12% and the standard deviation of its returns is 20%. Can you be 95% confident that this portfolio will not lose more than 30% of its value next year?
2. A homeowner planning a kitchen remodeling can afford a $600 monthly payment. How much can the homeowner borrow for 2 years at 3%, compounded monthly, and still stay within the budget? (Round your answer to the nearest cent.)