A stock had returns of 11%,1%,9%,15%,and -6% for the past five years. Based on these returns,what is the approximate probability that this stock will earn at least 23% in any one given year?
A) 0.5%
B) 1.0%
C) 2.5%
D) 5.0%
E) 16.0%

Question

Quizplus · Accepted Answer

The probability of earning at least 23% is based on the historical data provided. Since none of the past returns reached 23%, we assume a normal distribution and calculate the probability using the standard deviation and mean of the returns. This results in a low probability, approximately 2.5%.

A Stock Had Returns of 11%,1%,9%,15%,and -6% for the Past