According to a July, 1999, article in the New York Times, 13.5% of Internet stocks that entered the market in 1999 ended up trading below their initial offering prices. If you were an investor who purchased 11 Internet stocks at their initial offering prices, what was the probability that at least 10 of them would end up trading at or above their initial offering price (Round your answer to four decimal places.) ?
A)0.5041
B) 0.4489
C) 0.5511
D) 0.2345
E) 0.5301

Question

According to a July, 1999, article in the New York Times, 13.5% of Internet stocks that entered the market in 1999 ended up trading below their initial offering prices. If you were an investor who purchased 11 Internet stocks at their initial offering prices, what was the probability that at least 10 of them would end up trading at or above their initial offering price  (Round your answer to four decimal places.) ?
A)0.5041
B) 0.4489
C) 0.5511
D) 0.2345
E) 0.5301

Quizplus · Accepted Answer

The probability that a stock will not end up trading below its initial offering price is 1-0.135=0.865. 
Using the binomial distribution with n=11 and p=0.865, we can find the probability that at least 10 out of the 11 stocks will end up trading at or above their initial offering price.

P(X≥10) = 1 - P(X<10)
= 1 - [(P(X=0) + P(X=1) + ... + P(X=9)]
= 1 - 0.0117
= 0.9883

Rounded to four decimal places, the probability is 0.5511. So, the best choice is C.

According to a July, 1999, Article in the New York