Probability and Statistics: Exercises
4. Normal CDF. Assume returns for an asset are drawn from a normal distribution with mean 0.05 and standard deviation 0.10.
What is the probability of getting a return of -0.03 or lower? What is the probability of getting a return of
0.15 or higher? You can use the pnorm(q,mean,sd) function to compute the normal CDF.
# Compute probability of return -0.03 or lower.
___(___, 0.05, 0.10)
# Compute probability of return 0.15 or higher.
___ - ___
# Compute probability of return -0.03 or lower.
pnorm(-0.03, 0.05, 0.10)
# Compute probability of return 0.15 or higher.
1 - pnorm(0.15, 0.05, 0.10)
test_error()
test_output_contains("pnorm(-0.03, 0.05, 0.10)", incorrect_msg="Did you enter the correct arguments to `pnorm()`?")
test_output_contains("1 - pnorm(0.15, 0.05, 0.10)", incorrect_msg="Did you enter the correct arguments to `pnorm()`?")
success_msg("Well done!")
Did you use the
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