Problem of the Day


The stock price of Company X has a 60% chance of increasing on Monday and a 30% chance of increasing on Tuesday. Assuming the two probabilities are independent, what is the probability that the stock price of Company X increases on at least one of these days?

A. 22%
B. 30%
C. 45%
D. 72%
E. 90%

Reveal Answer

Answer

D. 72%

See the Solution

Solution

The only way the stock price will fail to increase on at least one of these days is if it does not increase on both days. The probability of it not increasing on Monday is 40% and the probability of it not increasing on Tuesday is 70%. Therefore, the probability of it not increasing on both days is 0.7*0.4=0.28 or 28%. We want the probability of this NOT happening, so subtract 0.28 from 1 to get the answer of 0.72 or 72%.


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