Ayoung investment manager tells his client that the probability of making a positive return with his suggested portfolio is 80%. if it is known that returns are normally distributed with a mean of 5.8%, what is the risk, measured by standard deviation, that this investment manager assumes in his calculation?

The risk, measured by standard deviation, that this investment manager assumes in his calculation is 0.0689

Step-by-step explanation:

Let X = rate of return

Since his client wants to make a positive return:

X > 0

P(X > 0) = 0.8

P(Z > (0-0.058)/sd) = 0.8

(0-0.058)/sd = -0.8416

-0.058/-0.8416 = standard deviation

standard deviation = 0.0689

Therefore, The risk, measured by standard deviation, that this investment manager assumes in his calculation is 0.0689

answer: no

step-by-step explanation: