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Conditional & Binomial Probabilities

Two stocks A and B are known to be related in that both are in the same industry. The probability that the stock A will go up in price tomorrow is 0.20, and the probability that both stocks A and B will go up tomorrow is 0.12. Suppose that tomorrow you find that stock A did go up in price. What is the probability that stock B went up as well?

An accounting firm carries an advertisement in the Wall Street Journal. The firm estimates that 60% of the people in the potential market read The Wall Street Journal; research further shows that 85% of the people who read the Journal remember seeing the advertisement when questioned about if afterward. What percentage of the people in the firm's potential market sees and remembers the advertisement?

A quality control engineer knows that 10% of the microprocessor chips produced by a machine are effective. Out of a large shipment, five chips are chosen at random. What is the probability that none of them is defective? What is the probability that at least one is defective? Explain.

The probability that a new product will be successful if a competitor does not come up with a similar product is 0.67. The probability that the new product will be successful in the presence of a competitor's new product is 0.42. The probability that the competing firm will come out with a new product during the period in question is 0.35 What is the probability that the product will be a success?

In 2007, Starbucks inaugurated its Dulce de Leche Latte. If 8% of all customers who walk in order the new drink, what is the probability that out of 13 people, at least1 will order a Dulce de Leche Latte? What assumption are you making?

Solution Summary

The solution provides step by step method for the calculation of conditional and binomial probabilities. Formula for the calculation and Interpretations of the results are also included.