A Portfolio Has a Current Value of $1000 $X$ Is Distributed Normally with Mean 100 and Standard Deviation 100

question 12

Multiple Choice

A portfolio has a current value of $1000.The annual profit $X$ is distributed normally with mean 100 and standard deviation 100.What is the probability that the portfolio will be worth less than 800 after one year?

• A)0.0014
• B)0.0062
• C)0.0228
• D)0.1587

---

Definitions:

Put Option

A Put Option is a financial contract that gives the holder the right, but not the obligation, to sell a specific quantity of an asset at a set price within a specified time.

Bondholders

Individuals or entities that hold debt securities issued by corporations or governments, entitling them to receive interest payments and the return of principal.

Warrant

A financial security that gives the holder the right to purchase the issuer's stock at a specified price before a specified expiry date.

Call Option

A financial contract that gives the holder the right, but not the obligation, to buy an asset at a specified price within a specified time period.