Hello guys

I’m having trouble understanding why the answer is A.

Please who can help?

Thanks

The z-scores of bonds and stocks are -0.4 [(0 - 2)/5] and -0.66666666 [(0-10)/15], respectively. Whichever asset class has the higher z-score will have more area (i.e. more probability) in the left tail.

B should be a little more than 95% instead of 99%; C should be using a z-score of (3-2)/5 = 0.2.

As the dividing line between negative and positive returns is 0%, you should compare the *z*-score for 0% for stocks to the *z*-score for 0% for bonds.

So . . . what are those numbers?

Bonds = -0.4

Stocks=-0.67

So . . . which is bigger:

- P\left(Z_{bonds} < -0.4\right)
- P\left(Z_{stocks} < -0.67\right)

?

Bonds

Thank you so much. I get it now

My pleasure.