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NEW QUESTION: 1
The following stock market return data were observed last year:
Returns# of stocks
less than -5% 129
between -5% and 0% 301
between 0% and 10% 636
between 10% and 20% 274
more than 20% 173
The probability that a randomly selected stock had either a negative return or a return more than 20% equals ________.
A. 0.27
B. 0.53
C. 0.60
D. 0.40
Answer: D
Explanation:
Explanation/Reference:
Explanation:
For a frequency distribution, the estimated probability of a particular class/event occurring equals the relative frequency of that class. Now, the number of stocks that had either a negative return or a return more than 20% equals 129 + 301 + 173 = 603. The total number of stocks equals 129 + 301 + 636 + 274 +
173 = 1513. Therefore, the estimated probability of a randomly selected stock having either a negative return or a return more than 20% equals 603/1513 = 0.40.