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Answer:
0.0667 = 6.67% probability that the shares of a company that fires its CEO will increase by more than 5%.
Step-by-step explanation:
Conditional Probability
We use the conditional probability formula to solve this question. It is
In which
P(B|A) is the probability of event B happening, given that A happened.
is the probability of both A and B happening.
P(A) is the probability of A happening.
In this problem:
Event A: Company fires the CEO
Event B: Shares increase by more than 5%.
Probability of a company firing it's CEO:
35% of 100 - 4 = 96%(shares did not increase by more than 5%).
60% of 4%(shared did increase by more than 5%).
So
Intersection of events A and B:
Fires the CEO and shared increased by more than 5%, is 60% of 4%. So
Probability that the shares of a company that fires its CEO will increase by more than 5%.
0.0667 = 6.67% probability that the shares of a company that fires its CEO will increase by more than 5%.