# Probablity

Gents & Ladies, could anyone help me out on this query plz? i think havent got the concepts right on probablity 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. D) Five to three.

I think its (A) 3 to 2 odds this is how I got to answer prob of atleast 20% return = 0.2 (from 10% return) +0.2 (from 15% return) +0.2 (from 20% return). odds for atleast 20% = prob of atleast 20%/(1- prob of atleat 20%) odds for atleast 20% = 0.6/0.4 = 3/2 i.e three to two odds

answer is right but how do you get 0.6 by adding prob of atleast 20% return = 0.2 (from 10% return) +0.2 (from 15% return) +0.2 (from 20% return). it should be 0.9

think of it as uniform discrete prob distribution with only 5 possible outcomes. Whenever there is an atleast question add the all the prob =< that number. In this case we have three returns that are less or equal to 20% and there prob are 0.2, 0.2, & 0.2. I added all these prob and got 0.6. The rest is simple odds for formula. I dont know how you are calculating 0.9, please explain a bit more so that I can clarify.

got you , well i calculated expected return (10%)*.2 + (15%)*.2 + (15%)*.2= .9. thansk for your help buddy how is your scoring going on q bank

I already passed L1 in June 08 … thanks for asking

OH GREAT , CONGRATS. have you found new job/sal increament anything good luck

3/5 is the prob of getting above 20%. So just take 3/5/2/5 --> 3/2 or 3 to 2.

Or just number instances with at least 20%. That’s 3. To 2 instances lower than 20%.

level1_dec Wrote: ------------------------------------------------------- > OH GREAT , CONGRATS. have you found new job/sal > increament anything good luck Thankyou level1_dec. Not yet … I will start looking after L2 … I am happy with my current employer… Happy is the man who is content…

level1_dec, Just curious What is the source of this question ?

charu, it is q bank