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# If the probability is 0.6 that stock A will increase in

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SVP
Joined: 28 Dec 2005
Posts: 1561
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If the probability is 0.6 that stock A will increase in [#permalink]

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17 Nov 2007, 10:27
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92% (01:44) correct 8% (00:44) wrong based on 40 sessions

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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
VP
Joined: 08 Jun 2005
Posts: 1145
Followers: 7

Kudos [?]: 213 [0], given: 0

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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

Director
Joined: 09 Aug 2006
Posts: 758
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Kudos [?]: 210 [0], given: 0

Re: PS : Probability of stocks [#permalink]

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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

SVP
Joined: 28 Dec 2005
Posts: 1561
Followers: 3

Kudos [?]: 160 [0], given: 2

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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
VP
Joined: 09 Jul 2007
Posts: 1100
Location: London
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Kudos [?]: 110 [0], given: 0

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17 Nov 2007, 12:51
which forum is it? testmagic? or scorechase?
Intern
Joined: 15 Jun 2009
Posts: 1
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Kudos [?]: 0 [0], given: 0

Re: PS : Probability of stocks [#permalink]

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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.
Manager
Joined: 27 Oct 2008
Posts: 185
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Kudos [?]: 150 [0], given: 3

Re: PS : Probability of stocks [#permalink]

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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
Re: PS : Probability of stocks   [#permalink] 28 Sep 2009, 04:03
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