Answer:
The Probability that the GHI is less than $70 in three days is 1% or 0.01
Step-by-step explanation:
Here, we want to find the probability that the GHI is less than $70.
So what we do here is to find the scenarios that could make the $60 less than $70 is three days;
Scenario 1;
Two days decrease and one day increase
That will bring the value to 60 -1-1 + 10 = $68 which is less than 70
Scenario 2;
Three days decrease
That will bring the value to
60-1-1-1 = 57 which is less than 70
Any other possible scenario to make the value of the share less than 70? NO !
For the 1st case scenario;
Two days decrease and one day increase;
The scheduled probabilities will be as follows;
Kindly recall, probability of increase = 90% = 90/100 = 0.9
Probability of decrease = 10% = 10/100 = 0.1
So probability in scenario 1 will be;
P(Two days decrease and one day increase)
= 0.1 * 0.1 * 0.9 = 0.009
Kindly note this can happen in any order and since no order was specified, we do not need to consider other cases
Scenario ii
Three days decrease
That will be;
P(three days decrease) = 0.1 * 0.1 * 0.1 = 0.001
So the addition of both since we will be having either of the two and or means addition in probability will be ;
0.001 + 0.009 = 0.01 = 1%
