An equity had returns of 8%, 14%, and 2% for the past three years.Based on these returns, what is the probability that this equity will earn at least 20% 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 is calculated based on historical data. Since none of the past returns reached 20%, the probability is 0%. However, the closest option to 0% is 2.5%, which is likely intended to represent a very low probability.

An Equity Had Returns of 8%, 14%, and 2% for the Past