During a given week the probability that a particular common stock issue will in

Question

During a given week the probability that a particular common stock issue will increase (I) in price, remain unchanged (U) or decline(D) in price is estimated to be 0.30, 0.20, and 0.50, respectively. What is the probability that the stock issue will increase in price or remain unchanged? What is the probability that the price of the issue will change during the week? The probability that a new marketing approach will be successful(S) is assessed as being 0.60. The probability that the expenditure for developing the approach can be kept within the original budget (B) is 0.50. The probability that both of these objectives will be achieved is estimated at 0.30. What is the probability that at least one of these objectives will be achieved?

Explanation / Answer

Both question solved with step by step process:

5.30)

Stock price I, U, D with probability .3,.2,.5

a) P( price will increase or remain unchanged) = .3+.2 = .5
b) P( price will change) = P(increase)+P(Decrease) = .3+.5 = .8

5.33)

P( new markerting succeds) = .6
P( exp. is in budget) = .5
P(both) = .30

P( one of the obj is covered) = ?
= P(A union B) = .6+.5 - .3 = .8

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