Problem 2. (12 points) A company is going to release four quarterly reports this

Question

Problem 2. (12 points) A company is going to release four quarterly reports this year. Suppose the company has a 32% chance of beating analyst expectations each quarter. a) What is the probability that the company beats analyst expectations every quarter of this year? ve a binomial distribution that n! x! (n-x)'p"(1-p)"-x with p 0.32, n = 4, and x = 4 0.52 4(9-9) What is the probability the company beats analyst expectations more than half the time this year? b) P(X > 2) = P(X = 3) + P(X = 4) P(X = or 1-P(X=0 (2 points if you answer up to this poin What is the expected number of times the company will beat analyst expectations this year? e) For a binomial distribution (2 points if you answer up to this point)

Explanation / Answer

Ans:

a)P(x=4)=4C4*0.32^4*(1-0.32)^0=0.32^4=0.0105

b)P(x>2)=P(x=3)+P(x=4)=4C3*0.32^3*(1-0.32)+0.0105=0.0891+0.0105=0.0996

c)Expectation=np=4*0.32=1.28

x P(x) 0 0.2138 1 0.4025 2 0.2841 3 0.0891 4 0.0105

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