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Answer:
The probability experiment represents a binomial experiment
Step-by-step explanation:
On a Binomial experiment we have the following:
- There are n identical experiment
- Every experiment has 2 possibilities: success or fail
- There is a probability p of success and (1-p) of fail
- Every experiment is independent
Therefore, the probability experiment represents a binomial experiment because we have:
- The investor purchases 3 stocks listed on a stock exchange
- Every stock has 2 possibilities: increase in value over the course of a year or doesn't increase in value over the course of a year
- There is a probability of 0.49 that the stock increase in value over the course of a year and a probability of (1-0.49) that the stock doesn't increase in value over the course of a year
- The probability that every stock listed on this exchange increase in value over the course of a year is independent.
So, the probability that x stocks from the 3 that the investor purchases increase in value over the course of a year is equal to:
Where n is 3, and p is 0.49