A stock analyst was provided with a list of 25 stocks. He was expected to pick 3 stocks from the list whose prices are expected to rise by more than 20% after 30 days. In reality, the prices of only 5 stocks would rise by more than 20% after 30 days. If he randomly selected 3 stocks from the list, he would use what type of probability distribution to compute the probability that all of the chosen stocks would appreciate more than 20% after 30 days?
A) binomial distribution
B) Poisson distribution
C) hypergeometric distribution
D) None of the above.

Question

Quizplus · Accepted Answer

The scenario described fits the criteria for a hypergeometric distribution, which involves selecting items from a finite population without replacement. In this case, the analyst is choosing 3 stocks from a list of 25 without replacement, and the success (stock price rising by more than 20%) is limited to only 5 of the 25 stocks. Therefore, the probability of selecting all three successful stocks can be calculated using the hypergeometric distribution formula.

A Stock Analyst Was Provided with a List of 25