Basic Statistics Question

[andyaf]

Hi,


I am using statistics to develop a finacial model on excel.


I have created a table that lists returns of a security over a given period of time. I have used formulas to calculate the mean and standard dev of the returns.


Right now, I am using the norm.inv function =norm.inv(.05, Standard Dev, Mean) to come up with the minimum return @ a 95% confidence.


Now, I want to come up with the MAX return at 95% confidence, but don't know which formula I should use:


Should I use:


NORM.INV(0.95,Mean,Standard dev)
or
NORM.DIST(0.05,Mean,Standard dev,TRUE)


I really appreciate the help!

[ajryan88]

Hi,

I believe it is the NORM.INV function that you want, as the NORM.DIST function will return a cumulative probability, whereas the NORM.INV function will return the corresponding x-value (maximum return) that you are looking for.

From Excel's Help Files:

Given a value for probability, NORM.INV seeks that value x such that NORM.DIST(x, mean, standard_dev, TRUE) = probability. Thus, precision of NORM.INV depends on precision of NORM.DIST.

Hope this helps

[andyaf]

Great, thank You!

[ajryan88]

No problems!

Please don't forget to mark this thread as solved and click on the * next to my post to say thanks

Have a great day!