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Basic Probability Problems

Data on the 30 largest bond funds provided one-year and five-year percentage returns for the period ending March 31,2000. Suppose we consider a one-year return in excess of 2% to be high and a five-year return in excess of 44% to be high. One-half of the finds had a one-year return in excess of 2%, 12 of the funds had a five-year return in excess of 44%, and six of the funds had a one-year return in excess of 2% and a five-year return in excess of 44%.

a. Find the probability of a fund having a high one-year return, the probability of having a five-year return, and the probability of having both a high one year return and a hight five-year return.
b. What is the probability that a fund has a high one-year return or a high five-year return or both?
c. What is the probability that a fund has neither a high one-year return nor a high five-year return?

Solution Summary

The solution gives the details of calculation of some basic probability problems. Step by step procedure is given with interpretations of the results obtained.

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