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Updated on: 16 Aug 2024, 08:24
Originally posted by vanshhpoddar on 13 Feb 2024, 20:49.
Last edited by Bunuel on 16 Aug 2024, 08:24, edited 2 times in total.
Last edited by Bunuel on 16 Aug 2024, 08:24, edited 2 times in total.
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X: 0.1
Y: 0.4
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
95%
(hard)
Question Stats:
45% (02:22) correct
55%
(02:52)
wrong
based on 637
sessions
History
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Time
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A stock trader working for a hedge fund has estimated that the stock of a certain company has probability 0.4 of increasing in price by at least 5 dollars during a certain trading day and probability 0.1 of increasing in price by at least 10 dollars during the trading day. Based on the trader's estimates, select for X and for Y the options such that the following statement is most accurate. Make only two selections, one in each column.
If the trader multiplies ____X____ by the reciprocal of ____Y____, then the result is the probability that the price of the stock will increase by at least 10 dollars during the trading day, given that the price increases by at least 5 dollars during the trading day.
If the trader multiplies ____X____ by the reciprocal of ____Y____, then the result is the probability that the price of the stock will increase by at least 10 dollars during the trading day, given that the price increases by at least 5 dollars during the trading day.
ID: 700222
| X | Y | |
| 0.1 | ||
| 0.4 | ||
| 0.1 divided by 0.4 | ||
| the reciprocal of 0.1 | ||
| the product of 0.1 and 0.4 |
ShowHide Answer
Official Answer
X: 0.1
Y: 0.4
08 Mar 2024, 00:40
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If you found this question difficult, it could be because of one or more of these reasons:
This question is in fact packed with learnings that you can apply to several DI questions.
Watch this video and observe the visualization at play at 3:32 mark.
Let us know if you have any questions.
Happy Learning!
- You are scared of probability questions.
- The question statement is complex because of the use of variables, usage of at least for two aspects.
This question is in fact packed with learnings that you can apply to several DI questions.
Watch this video and observe the visualization at play at 3:32 mark.
Let us know if you have any questions.
Happy Learning!
16 Feb 2024, 09:09
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A stock trader working for a hedge fund has estimated that the stock of a certain company has probability 0.4 of increasing in price by at least 5 dollars during a certain trading day and probability 0.1 of increasing in price by at least 10 dollars during the trading day. Based on the trader's estimates, select for X and for Y the options such that the following statement is most accurate. Make only two selections, one in each column.
Here's an intuitive way to answer this question.
Whenever the price increases by $10, it has also increased by $5. So, the price increases by $10 a fraction of the time it increases by $5.
Looking at the information given, we see that the price increases by $10 on 0.1 of the time, and the price increases by $5 0.4 of the time.
Accordingly, the price increases by $10 0.1/0.4 = 1/4 of the time it increases by $5.
So, given that the price has increased by $5, the probability that it will increase by $10 is 1/4.
Now, we need a way to express 1/4 using the statement and answer choices.
The statement says the following:
If the trader multiplies ____X____ by the reciprocal of ____Y____, then the result is the probability that the price of the stock will increase by at least 10 dollars during the trading day, given that the price increases by at least 5 dollars during the trading day.
So, we have the following:
the probability that the price will increase by at least 10 dollars given that the price increases by at least 5 dollars = 1/4 = X * the reciprocal of Y
So, we need to find answer choices for X and Y such that 1/4 = X * the reciprocal of Y.
0.1
0.4
0.1 divided by 0.4
the reciprocal of 0.1
the product of 0.1 and 0.4
We see that the two choices for for X and Y such that 1/4 = X * the reciprocal of Y are 0.1 for X and 0.4 for Y, as we can see from the following:
0.1 * 1/0.4 = 0.1/0.4 = 1/4
Correct answer: 0.1, 0.4
Here's an intuitive way to answer this question.
Whenever the price increases by $10, it has also increased by $5. So, the price increases by $10 a fraction of the time it increases by $5.
Looking at the information given, we see that the price increases by $10 on 0.1 of the time, and the price increases by $5 0.4 of the time.
Accordingly, the price increases by $10 0.1/0.4 = 1/4 of the time it increases by $5.
So, given that the price has increased by $5, the probability that it will increase by $10 is 1/4.
Now, we need a way to express 1/4 using the statement and answer choices.
The statement says the following:
If the trader multiplies ____X____ by the reciprocal of ____Y____, then the result is the probability that the price of the stock will increase by at least 10 dollars during the trading day, given that the price increases by at least 5 dollars during the trading day.
So, we have the following:
the probability that the price will increase by at least 10 dollars given that the price increases by at least 5 dollars = 1/4 = X * the reciprocal of Y
So, we need to find answer choices for X and Y such that 1/4 = X * the reciprocal of Y.
0.1
0.4
0.1 divided by 0.4
the reciprocal of 0.1
the product of 0.1 and 0.4
We see that the two choices for for X and Y such that 1/4 = X * the reciprocal of Y are 0.1 for X and 0.4 for Y, as we can see from the following:
0.1 * 1/0.4 = 0.1/0.4 = 1/4
Correct answer: 0.1, 0.4
