PROBLEM (2): Financial: Suppose your financial advisor has recommended three sto

Question

PROBLEM (2): Financial: Suppose your financial advisor has recommended three stocks, each of which has the probability of (0.6) 60% increasing in value over the next year. Assuming that each stock performance is independent, 9) What is the probability that all three stocks will increase in value over the next year? ( Put answer in decimal form round to three decimal places) 10.) What is the probability that at least one stock (out of three) will not increase in value? ( Put answer in decimal form round to three decimal places)

Explanation / Answer

9)probability that all 3 stocks increase next year =P( first stock increases*second stock increases*third stock increases) =0.6*0.6*0.6=0.216

10)probability that at least one stock willl not increase =1-P( all stock rises) =1-0.216 =0.784

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