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In economic theory, a hurdle rate is the minimum return that a person requires before
Chapter 0, Problem 29(choose chapter or problem)
In economic theory, a hurdle rate is the minimum return that a person requires before they will make an investment. A research report says that annual returns from a specific class of common equities are distributed according to a normal distribution with a mean of 12 percent and a standard deviation of 18 percent. A stock screener would like to identify a hurdle rate such that only 1 in 20 equities is above that value. Where should the hurdle rate be set?
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QUESTION:
In economic theory, a hurdle rate is the minimum return that a person requires before they will make an investment. A research report says that annual returns from a specific class of common equities are distributed according to a normal distribution with a mean of 12 percent and a standard deviation of 18 percent. A stock screener would like to identify a hurdle rate such that only 1 in 20 equities is above that value. Where should the hurdle rate be set?
ANSWER:Step 1 of 3
Given:
We are interested in the cutoff value for the top 
