The portfolio will result in at least 2,067,451 euros with 85 percent probability rather than 2,100,000 euros with 80 percent probability

can someone tell how these probabilities of 85% and 80% derived?

Thanks

The portfolio will result in at least 2,067,451 euros with 85 percent probability rather than 2,100,000 euros with 80 percent probability

can someone tell how these probabilities of 85% and 80% derived?

Thanks

Your job is to allocate assets among different layers that would fit with his needs and desires.

Layer 1, if you invest 1 dollar here, you will get 1% on your investment with a probability of 100%.

He invests 1,568,627 and expects a return of 1,584,313.

Layer 3,

The investment amount is 431,373. And there are three scenarios that could happen.

Scenario1: you lose 50% of 431,373. The probability of this happening is 15%. Your ending value in this layer is 215,687. Now, if you add this number to the return from Layer 1, you get 1,800,000. The chance of that stays 15%.

Scenario 2: you gain 12% on 431373, so the return is 483138. Add this number to return on layer 1 and you get 2,067,451, with a chance of 50%.

Scenario 3. The ending value is 2,339,216, with a chance of that happening being 35%.

How does 85% value come up?

“The portofolio will result in at least 2,067,451”. This means that you add the scenario 2 and scenario 3 together. 50%+35%=85%.

I got it now… Thank you!!