Compute At-least Probabilities
-Investing is a game of chance. Suppose there is a 40% chance that a risky stock investment will end up in a total loss 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.
A) 0.9222
B) 0.259
C) 0.0518
D) 0.0102

Question

Quizplus · Accepted Answer

The probability of at least one loss is 1 minus the probability of no losses. The probability of no loss in a single investment is 60% (or 0.6), so for five independent investments, it's $0.6^5 = 0.07776$. Thus, the probability of at least one loss is $1 - 0.07776 = 0.92224$, which rounds to 0.9222.

Compute At-Least Probabilities -Investing Is a Game of Chance. Suppose There Is a There