SOLUTION: A financial analyst has determined that there is a 25% probability that a mutual fund will outperform the market over a 1-year period provided that it outperforms the market the pr
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Question 1149633: A financial analyst has determined that there is a 25% probability that a mutual fund will outperform the market over a 1-year period provided that it outperforms the market the previous year. If only 15% of mutual funds outperform the market during any year, what is the probability that a mutual fund will outperform the market 2 years in a row? Answer by Theo(13342) (Show Source):
You can put this solution on YOUR website! i believe your solution will be .25 * .15 = .0375.
in the previous year, assume 1200 mutual funds.
15% of them outperformed the market means that 180 outperformed the market.
of those 180, 25% = 45 outperformed the market the second year.
45 / 1200 = .0375.
