Question 1083770: Investing in stocks is game of chance. It involves risk. Even then people invests in this kind of stocks because high risk investments have high rewards. Suppose there is a 60% 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 three independent risky stocks.
Find the probability that at least one of your investments becomes a total loss.
Can you please help me with this?
Answer by Theo(13342)   (Show Source):
You can put this solution on YOUR website! probability that you will have a total loss of your investment in a risky stock is .6.
therefore the probability that you won't have a total loss of your investment in a risky stock is 1 - .6 = .4
you invest in 3 risky stocks, each of which has a probability of .6 of being a total loss.
this means that each has a probability of .4 of not being a total loss.
the probability that at least one of your stocks will wind up as a total loss is 1 minus the probability that none of your stocks will wind up as a total loss.
since the probability that each of your risky stocks will not end up as a total loss is .4, then the probability that all of your stocks will not wind up as a total loss is .4 * .4 * .4 = .064.
since the probability that at least one of your stocks will wind up as a total loss is equal to 1 minus the probability that none of your stocks will wind up as a total loss, then the probability that at least one of your stocks will wind up as a total loss is 1 - .064 = .936
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