Suppose the returns of a particular group of mutual funds ar

Suppose the returns of a particular group of mutual funds are normally distributed with a mean of 10.1% and a standard deviation of 5.9%. If the manager of a particular fund wants his fund to be in the top 5% of funds with the highest return, what return must his fund have? (please round your answer to 2 decimal places)

Solution

mean = 10.1, std dev = 5.9

x = 5%

For x = 5, z = (5 - 10.1) /5.9 = -0.864

Hence P(x = 5) = P(z = -0.864

0.1949