Suppose that 1,000,000 people select which stocks to buy and hold for the year by throwing darts

Question:

Suppose that 1,000,000 people select which to buy and hold for the year by throwing darts at the stock page. Suppose, too, that in any given year:
• The average stock price rises by 7 percent.
• In any given year, 50 percent of the dart throwers will have a return that is average or better.
• In any given year and by luck alone, 20 percent of the dart throwers will “beat the average” by 5 percentage points or more.
• In any given year and by luck alone, 10 percent of the dart throwers will beat the average by 10 percentage points or more.
a. After five years, how many people will report that they’ve earned 7 percent (the market average) or more on their in every one of the previous five years?
b. After five years, how many people will report that they’ve earned 12 percent (5 percent above the average) or more on their in every one of the previous five years?
c. After five years, how many people will report that they’ve earned 17 percent or more on their in every one of the previous five years?

Stocks
Stocks or shares are generally equity instruments that provide the largest source of raising funds in any public or private listed company's. The instruments are issued on a stock exchange from where a large number of general public who are willing...