This is very easy but I’m bad at Probabilities…ahhhhh!!! The probabilities of earning a specified return from a portfolio are shown below: Probability | Return 0.20 10% 0.20 20% 0.20 22% 0.20 15% 0.20 25% What are the odds of earning at least 20%? A) Three to two. B) Two to three. C) Three to five. ----------------------------------------------------------
I’m possibly underthinking this, but three of the five returns are 20% or over. Therefore 3/5, or C.
Answer is A. P(E)/[P(E)-1] … I don’t get why P(E) = .60 …??? Any clue guys?
Odds of earning at least 20% is 3:2, which is option A.
alsrs, you are calculating probabilities…, the question asked for odds. Your answer is correct if question actually asked for probabilities. Prob will be 3/5 - 0.60. Odds are written as X:Y, which in this case is 3:2.
yeah, I’m retarded, it’s A. I have a bad habit of not reading the entire question.
Think of it like gambling. I dont like this notation either, I have never seen this in any of my stats classes nor on any analysis. I think it is markets speak or something, perhaps someone else knows who uses these numbers or why.
3/5 ÷ 1 -3/5 = 3/5÷ 2/5 =3/2