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Originally Posted by silvergray545
Ok, here's a more detailed post. I think I figured out the problem. You need to subtract 1 from the equation on excel to get the probability. But I still don't understand why I'm getting 1's, 0's and other weird numbers. Doing it by hand doesn't work either. The z scores are completely off the chart. I'll incude the case study and the work I've done.
I appreciate the responses guys. Thanks
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the 0's and 1's aren't a bad thing, they aren't technically whole numbers, in reality they are something like .00000000001 or .9999999999, but excel just rounds because there is really no difference. When it returns 0 it means that there is basically a 0% chance of something occurring.
Ex. your fixed annuity would never return more than 20%, the std dev is tiny,so excel returns a 0 (E2). Also there is a 100% chance that it will return more than 5% so it displays a 1 in the cell (D2).
I would take another look at G, H, and I. You must have messed up a sign in the formula because your are essentially saying that all of the investments are likely to have a negative return. All of the probabilities are >75%. You need to subtract the values from 1 to get the answers.
You need to think these through, 99% chance of a t-bond losing >20% doesn't make sense (I4).