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If the probability is 0.6 that stock A will increase in

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SVP
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If the probability is 0.6 that stock A will increase in [#permalink] New post 17 Nov 2007, 09:27
00:00
A
B
C
D
E

Difficulty:

  5% (low)

Question Stats:

85% (01:50) correct 14% (00:44) wrong based on 7 sessions
If the probability is 0.6 that stock A will increase in value during the next month and the probability is 0.4 that stock B will increase in value during the next month, what is the greatest possible value for the probability that neither of these two events will occur?

A) 0.20

B) 0.24

C) 0.40

D) 0.46

E) 0.60
VP
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 [#permalink] New post 17 Nov 2007, 09:36
Stock A = 3/5
Stock B = 2/5

not A & not B = 2/5*3/5 = 6/25

A & not B = 3/5*3/5 = 9/25

B & not A = 2/5*2/5 = 4/25

total

1 - 19/25 = 6/25

the answer is (B)

:)
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Re: PS : Probability of stocks [#permalink] New post 17 Nov 2007, 09:42
pmenon wrote:
If the probability is 0.6 that stock A will increase in value during the next month and the probability is 0.4 that stock B will increase in value during the next month, what is the greatest possible value for the probability that neither of these two events will occur?

A) 0.20

B) 0.24

C) 0.40

D) 0.46

E) 0.60


p(A will not rise) = .4
p(B will not rise) = .6
p (A will not rise & B will not rise) = .6 * .4 = .24

Answer B
SVP
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 [#permalink] New post 17 Nov 2007, 11:48
i had the exact same answer, but another forum is saying that the answer is 0.4 .... i dont think this is right, and feel even more confident after KillerSquirrel answered as 0.24 :)
VP
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 [#permalink] New post 17 Nov 2007, 11:51
which forum is it? testmagic? or scorechase?
Intern
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Re: PS : Probability of stocks [#permalink] New post 16 Jun 2009, 17:04
The argument for 0.4 stems from the question of whether the two stocks are independent or not. The question doesn't say whether they are independent, and, as most people understand, stocks tend to move together. If the answer is in fact 0.24, then the question should be more explicit, or should not use stocks as the example.

The 0.4 represents the maximum possible probability if the two events are dependent in some fashion.
Manager
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Re: PS : Probability of stocks [#permalink] New post 28 Sep 2009, 03:03
If the probability is 0.6 that stock A will increase in value during the next month and the probability is 0.4 that stock B will increase in value during the next month, what is the greatest possible value for the probability that neither of these two events will occur?

A) 0.20

B) 0.24

C) 0.40

D) 0.46

E) 0.60


Soln:
= (1-P(A) * (1-P(B))
= .4 * .6
=.24

Ans is B
Re: PS : Probability of stocks   [#permalink] 28 Sep 2009, 03:03
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