Asked by Abobakr Kamal on Jul 02, 2024
Verified
A stock had returns of 10%, 2%, 8%, 17%, and - 7% for the past five years. Based on these returns, what is the approximate probability that this stock will return at least 15% in any one given year?
A) 0.5%
B) 1.0%
C) 2.5%
D) 5.0%
E) 16.0%
Probability
The measure of the likelihood that an event will occur, expressed as a number between 0 and 1, where 0 indicates impossibility and 1 indicates certainty.
Returns
The profit or loss derived from an investment, often expressed as a percentage of the investment amount.
- Master the technique of computing the probabilistic return range for a stock.
Verified Answer
ZK
Zybrea KnightJul 03, 2024
Final Answer :
E
Explanation :
Out of the five years, the stock returned at least 15% in one year. Therefore, the probability is 1 out of 5, which is 20%. However, since 16.0% is the closest option provided, it is the correct choice.
Learning Objectives
- Master the technique of computing the probabilistic return range for a stock.
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