What is the probability that at most two of these general equity trust funds performed better than the overall JSE share index over the past year (rounded off to three decimals)?
Compound Probability
Compound probability can be defined as the probability of the two events which are independent. It can be defined as the multiplication of the probability of two events that are not dependent.
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Probability theory is a branch of mathematics that deals with the subject of probability. Although there are many different concepts of probability, probability theory expresses the definition mathematically through a series of axioms. Usually, these axioms express probability in terms of a probability space, which assigns a measure with values ranging from 0 to 1 to a set of outcomes known as the sample space. An event is a subset of these outcomes that is described.
Conditional Probability
By definition, the term probability is expressed as a part of mathematics where the chance of an event that may either occur or not is evaluated and expressed in numerical terms. The range of the value within which probability can be expressed is between 0 and 1. The higher the chance of an event occurring, the closer is its value to be 1. If the probability of an event is 1, it means that the event will happen under all considered circumstances. Similarly, if the probability is exactly 0, then no matter the situation, the event will never occur.
Oasis is an asset management company in South Africa. It has found that there is a three-in-five chance that a general equity unit trust fund will perform better than the overall JSE share index over any one-year period. Seven general equity unit trust funds are randomly selected from general equity unit trust funds. What is the probability that at most two of these general equity trust funds performed better than the overall JSE share index over the past year (rounded off to three decimals)?
- A. 0.096
- B. 0.012
- C. 0.017
- D. 0.015
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