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Statistics question: Probability problems

1. An investor owns three common stocks. Each stock, independent
of the other, has equally likely chances of:
(1) increasing in value,
(2) decreasing in value,
(3) remaining the same value

List the possible outcomes of this experiment. Estimate the probability at least two of the stocks increase in value.

2. If you ask three strangers about their birthdays, what is the probability:
(a) All were born on Wednesday?
(b) All were born on different days of the week?
(c) None were born on Saturday?

Solution Preview

1. An investor owns three common stocks. Each stock, independent
of the other, has equally likely chances of:
(1) increasing in value, ---------Denote by I
(2) decreasing in value, ---------Denote by D
(3) remaining the same value ---------Denote by R

List the possible outcomes of this experiment. Estimate the
probability at least two of the stocks increase in value.

Assume that three common stocks are stock A, B and C. So, the possible outcomes of this experiment are the following.

I I I; I I D; I ...

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