Answer:
b) 0.0007
c) 0.4163
d) 0.2375
Step-by-step explanation:
We are given the following:
We treat securities lose value as a success.
P(Security lose value) = 70% = 0.7
Then the securities lose value follows a binomial distribution, where
where n is the total number of observations, x is the number of success, p is the probability of success.
Now, we are given n = 20.
a) Assumptions
- There are 20 independent trials.
- Each trial have two possible outcome: security loose value or security does not lose value.
- The probability for success of each trial is same, p = 0.7
b) P(all 20 securities lose value)
We have to evaluate:
0.0007 is the probability that all 20 securities lose value.
c) P(at least 15 of them lose value.)
d) P(less than 5 of them gain value.)
P(gain value) = 1 - 0.7 = 0.3
This question is about compound interest, but since the interest is such a small number you can use what you know about simple interest to eliminate some answers.
You can immediately eliminate choice A as a clunker, since it is less than the original amount in the account.
Consider what the amount of interest would be if you make the rate much larger than the original rate, say 10%, or 0.1:
$6,500 × 0.1 = $650
If this amount were added to the original amount each year for two years, the total would be:
$6,500 + $650 + $650 = $6,500 + $1,300 = $7,800
This is an over-estimate for the information given, and since choices C and D are even greater than this over-estimate, they can be eliminated. That means choice B is the correct answer.
Answer:
d
Step-by-step explanation:
Its 3
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