Investing is a game of chance. Suppose there is a 36% chance that a risky stock investment will end up in a totalloss of your investment. Because the rewards are so high, you decide to invest in five independent risky stocks.Find the probability that at least one of your five investments becomes a total loss. Round to the nearestten-thousandth when necessary.
A) 0.8926
B) 0.302
C) 0.0604
D) 0.006

Question

Quizplus · Accepted Answer

The probability that at least one investment becomes a total loss is 1 minus the probability that none of the investments becomes a total loss. The probability of not losing on a single investment is 1 - 0.36 = 0.64. For five independent investments, the probability of not losing on any is $0.64^5$. Thus, the probability of at least one loss is $1 - 0.64^5 = 1 - 0.1074 = 0.8926$.

Investing Is a Game of Chance