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Conditional & Binomial Probabilities

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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?

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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?

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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.

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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?

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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?

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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.

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