SOLUTION: Investing is a game of chance. Suppose there is a 39% chance that a risky stock investment will end up in a total loss of your investment. Because the rewards are so high, you de
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Question 380950: Investing is a game of chance. Suppose there is a 39% 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.
I'm so confused! Thank you so much for your help!
Answer by Theo(13342) (Show Source): You can put this solution on YOUR website!
probability of total loss of one risky investment = .39
you take 5 risky investments, each with a probability of total loss of .39.
since the probability of total loss of each investment is .39, then the probability that the investment will not be a total loss is 1 - .39 = .61
the probability that none of the 5 investments will be a total loss is .61^5 = .08445963.
the probability that at least one of these investments will be a total loss is 1 - .61^5.
that probability would be .91554037
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