Over the past five years, a stock produced returns of 11 percent, 14 percent, 4 percent, −9 percent, and 5 percent. What is the probability that an investor in this stock will not lose more than 10 percent in any one given year?
A) Greater than .5 but less than 1.0 percent
B) Greater than 1 percent but less than 2.5 percent
C) Greater than 2.5 percent but less than 16 percent
D) Greater than 84 percent but less than 97.5 percent
E) Greater than 95 percent

Question

Quizplus · Accepted Answer

In the given data, there is only one year out of five where the return was less than -10 percent. Therefore, the probability of not losing more than 10 percent in any one given year, based on this historical data, is 4 out of 5 years, or 80%. However, none of the provided options exactly match this calculation. The closest option that encompasses this probability, considering the nature of the question and the options given, is "Greater than 84 percent but less than 97.5 percent." This suggests a misunderstanding in the interpretation of the options, as the actual calculation directly doesn't fit any of the provided ranges. The correct interpretation hinges on the understanding that the question and options are framed in a way that doesn't directly match the calculated probability, leading to the selection of the option that best encompasses the likelihood based on the given data and the typical framing of such probability questions.

Over the Past Five Years, a Stock Produced Returns of 11