SOLUTION: Investors do not invest all their money in the investment predicted to be the best because it is too risky. An investor holds shares in three independent companies:Company A, Compa

Question 204748: Investors do not invest all their money in the investment predicted to be the best because it is too risky. An investor holds shares in three independent companies:Company A, Company B, and Company C. An analyst predicts the probability of profit increase for each as follows:
Company A:0.70
Company B:0.50
Company C:0.065
A.)If the analyst's predictions are true, what is the probability that all three companies show a profit increase?
B.)If the analyst's predicitions are true, what is the probability that at least one company will show profit increase?
Answer by stanbon(75887) (Show Source): You can put this solution on YOUR website!
An investor holds shares in three independent companies:Company A, Company B, and Company C. An analyst predicts the probability of profit increase for each as follows:
Company A:0.70
Company B:0.50
Company C:0.065
A.)If the analyst's predictions are true, what is the probability that all three companies show a profit increase?
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P(all show profit) = 0.7*0.5*0.065 = 0.02275...
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B.)If the analyst's predicitions are true, what is the probability that at least one company will show profit increase?
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P(none show profit) = 0.3*0.5*0.935 = 0.14025..
----
P(at least one company shows profit) = 1-P(all show)-P(none show)
= 1 - 0.02275 - 0.14025 = 0.8370...
Cheers,
Stan H.
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