The likelihood of Company A's stock price rising is 20%, and the likelihood of Company B's stock price rising is 30%. Assume that the returns of Company A and Company B stock are independent of each other. The probability that the stock price of at least one of the companies will rise is ________.
A) 6%.
B) 10%.
C) 44%.
D) 50%.

Question

Quizplus · Accepted Answer

The probability that the stock price of at least one of the companies will rise can be determined by finding the probability that the stock price of neither company will rise, and then subtracting that probability from 1 (the total probability).
The probability that neither Company A's stock price nor Company B's stock price will rise is:
(1 - 0.20) x (1 - 0.30) = 0.56
Therefore, the probability that at least one of the companies' stock prices will rise is:
1 - 0.56 = 0.44 or 44%.

The Likelihood of Company A's Stock Price Rising Is 20