31 May Question Econ2300 assignment: Ch4 Quiz
Question
Econ2300
assignment: Ch4 Quiz
1.
Each month a brokerage house studies various companies and rates each company’s stock as being either “low risk” or “moderate to high risk.” In a recent report, the brokerage house summarized its findings about 26 aerospace companies and 81 food retailers in the following table:
Company Type Low Risk Moderate to High Risk
Aerospace company 9 17
Food retailer 57 24
________________________________________
If we randomly select one of the total of 107 companies, find
(a) The probability that the company’s stock is moderate to high risk given that the firm is an aerospace company. (Round your answer to 2 decimal places.)
P(high|aero)
(b) The probability that the company’s stock is moderate to high risk given that the firm is a food retailer.(Round your answer to 2 decimal places.)
P(high|food)
(c) Determine if the company type is independent of the level of risk of the firm’s stock. (Round your answers to 2 decimal places.)
Dependent. For two events to be independent, P(Aero | Low) = P(Aero). P(Aero | Low)
= but the P(Aero) = . They are not equal.
2.
29 percent of the employees in a company have managerial positions, and 39 percent of the employees in the company have MBA degrees. Also, 74 percent of the managers have MBA degrees. Using the probability formulas, find the proportion of employees who either have MBAs or are managers. (Round your answer to 2 decimal places.)
P(MBA Manager)
3.
10.00 points
An investor holds two stocks, each of which can rise (R), remain unchanged (U), or decline (D) on any particular day.
Assume that for the first stock (on a particular day)
P(R) = .70 , P(U) = .15 , P(D ) = .15
and that for the second stock (on a particular day)
P(R) = .65 , P(U) = .20 , P(D ) = .15
Assuming that these stocks move independently, find the probability that both stocks decline; the probability that exactly one stock rises; the probability that exactly one stock is unchanged; the probability that both stocks rise.
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