A financial analyst is presented with information on the past records of 60 start-up companies and told that in fact only 3 of them have managed to become highly successful.He selected 3 companies from this group as the candidates for success.To analyze his ability to spot the companies that will eventually become highly successful,he will use what type of probability distribution?
A)binomial distribution.
B)Poisson distribution.
C)hypergeometric distribution.
D)none of the above.

Question

Quizplus · Accepted Answer

The hypergeometric distribution is appropriate in this scenario because it is used to model the probability of obtaining a certain number of successes when sampling without replacement from a finite population with a specific number of successes and failures. In this case, the analyst is selecting 3 companies from a population of 60, with only 3 of them being highly successful. The binomial distribution would be appropriate if the analyst was selecting companies with replacement, and the Poisson distribution is used to model the number of occurrences of an event in a fixed interval of time or space, which is not applicable here.

A Financial Analyst Is Presented with Information on the Past