An investor purchased 100 shares of Fifth Third Bank stock and 100 shares of Santee Electric Cooperative stock. The probability the bank stock will appreciate over a year is .70. The probability the electric utility will increase over the same period is .60.

a. What is the probability both stocks appreciate during the period?

b. What is the probability the bank stock appreciates but the utility does not?

c. What is the probability at least one of the stocks appreciates?

Solution 64E

Step1 of 4:

The number of shares purchased an investor from Fifth Third Bank stock = 100,

The number of shares purchased an investor from Electric Cooperative stock = 100,

The probability the bank stock will appreciate over a year = 0.70, and

The probability the electric utility will increase over the same period = 0.60.

Here our goal is:

a). We need to find the probability both stocks appreciate during the period.

b). We need to find the probability the bank stock appreciates but the utility does not.

c). We need to find the probability at least one of the stocks appreciates.

Step2 of 4:

a).

Let us define an event are:

A = The bank stock will appreciate over a year.

B = The electric utility will increase over the same period.

Now, The probability both stocks appreciate during the period is:

Therefore, The probability both stocks appreciate during the period is 0.42.

Step3 of 4:

b).

The probability the bank stock appreciates but the utility does not is:

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