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If the probability is 0.6 that stock A will increase in

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pmenon
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If the probability is 0.6 that stock A will increase in [#permalink] New post   17 Nov 2007, 10:27
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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



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Re: If the probability is 0.6 that stock A will increase in [#permalink] New post   17 Nov 2007, 10:36
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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GK_Gmat
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Re: If the probability is 0.6 that stock A will increase in [#permalink] New post   17 Nov 2007, 10:42
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
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Re: If the probability is 0.6 that stock A will increase in [#permalink] New post   17 Nov 2007, 12:48
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 :)
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Re: If the probability is 0.6 that stock A will increase in [#permalink] New post   17 Nov 2007, 12:51
which forum is it? testmagic? or scorechase?
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xanados
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Re: If the probability is 0.6 that stock A will increase in [#permalink] New post   16 Jun 2009, 18:04
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.
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Re: If the probability is 0.6 that stock A will increase in [#permalink] New post   28 Sep 2009, 04:03
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



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Thank you for understanding, and happy exploring!
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Re: If the probability is 0.6 that stock A will increase in [#permalink]
28 Sep 2009, 04:03
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