Quantitative Methods Q147
0. The probabilities of earning returns are as follows:
| Probability | Return |
| 0.20 | 15% |
| 0.20 | 20% |
| 0.20 | 7% |
| 0.20 | 12% |
| 0.20 | 13% |
What are the odds of earning at least 15%?
- Option : A
- Explanation : The odds of an event can be determined by dividing the probability of the event occurring by the probability of the event not occurring. As a formula this can be expressed as: P(E) / (1 – P(E)). In this case the probability of the event (earning at least 15%) is 0.20 + 0.20 which 0.40. The probability of the event not occurring (earning less than 15%) is 0.20 + 0.20 + 0.20 = 0.60. Hence the odds are 0.40/0.60 = 2/3. This can also be written as 2 to 3.
