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Math Help - Normal distribution problem

  1. #1
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    Normal distribution problem

    Shares in a collection of companies have an average rate of return (%) of 7, with a standard deviation of 21. Rather than put all my money into one company's shares, I divide it equally between a portfolio of 36 of the companies.

    1) What is the expected rate of return on the portfolio?

    2) What is the standard deviation of the rate of return of the portfolio?

    3) Using a normal distribution, estimate the probability that I will lose money on this portfolio (rate of return \leq 0)
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  2. #2
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    where are you stuck exactly?
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  3. #3
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    Quote Originally Posted by SpringFan25 View Post
    where are you stuck exactly?
    Yeah not really sure on how to approach the questions. Do you mind giving me an idea on how to approach say part (1) and I'll see how I go from there.

    Is the average rate of return the mean?
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  4. #4
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    Since it's an average rate of return, we would assume that the expected value of return on the portfolio is 7%.
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