Your grandmother is considering investing in a large, listed company. She has performed some research on the company and has provided you with the following historical information: Year Return 1 10% 2 17% 3 25% 4 -2% 5 5% She is unsure about this investment as she does not want to earn a return less than 2%. Determine the probability that the share will generate a return less than 2% (rounded to the nearest two decimal places). a. 66.85% b. 9.36% c. 96.00% d. 16.85% e. 33.15%
Your grandmother is considering investing in a large, listed company. She has performed some research on the company and has provided you with the following historical information: Year Return 1 10% 2 17% 3 25% 4 -2% 5 5% She is unsure about this investment as she does not want to earn a return less than 2%. Determine the probability that the share will generate a return less than 2% (rounded to the nearest two decimal places). a. 66.85% b. 9.36% c. 96.00% d. 16.85% e. 33.15%
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Your grandmother is considering investing in a large, listed company. She has performed some research on the company and has provided you with the following historical information:
|
Year |
Return |
|
1 |
10% |
|
2 |
17% |
|
3 |
25% |
|
4 |
-2% |
|
5 |
5% |
a.
66.85%
b.
9.36%
c.
96.00%
d.
16.85%
e.
33.15%
Expert Solution
Step 1
Let the average return = Ra
Standard deviation = SD
Let Rn be the return in year n.
R1 = 10%
R2 = 17%
R3 = 25%
R4 = -2%
R5 = 5%
Step by step
Solved in 2 steps
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