An investment analyst collects data on stocks and notes whether or not dividends were paid and whether or not the stocks increased in price over a given period. Data are presented in the following table. Price No Price Increase Increase Total Dividends paid 34 78 112 No dividends paid 85 49 134 Total 119 127 246 a. If a stock is selected at random out of the analyst’s list of 246 stocks, what is the probability that it increased in price? b. If a stock is selected at random, what is the probability that it paid dividends? c. If a stock is randomly selected, what is the probability that it both increased in price and paid dividends?
Contingency Table
A contingency table can be defined as the visual representation of the relationship between two or more categorical variables that can be evaluated and registered. It is a categorical version of the scatterplot, which is used to investigate the linear relationship between two variables. A contingency table is indeed a type of frequency distribution table that displays two variables at the same time.
Binomial Distribution
Binomial is an algebraic expression of the sum or the difference of two terms. Before knowing about binomial distribution, we must know about the binomial theorem.
2–33. An investment analyst collects data on stocks and notes whether or not
dividends were paid and whether or not the stocks increased in price over a given period.
Data are presented in the following table.
Price No Price
Increase Increase Total
Dividends paid 34 78 112
No dividends paid 85 49 134
Total 119 127 246
a. If a stock is selected at random out of the analyst’s list of 246 stocks, what is
the
b. If a stock is selected at random, what is the probability that it paid dividends?
c. If a stock is randomly selected, what is the probability that it both increased
in price and paid dividends?
d. What is the probability that a randomly selected stock neither paid dividends
nor increased in price?
e. Given that a stock increased in price, what is the probability that it also paid
dividends?
f. If a stock is known not to have paid dividends, what is the probability that it
increased in price?
g. What is the probability that a randomly selected stock was worth holding
during the period in question; that is, what is the probability that it increased
in price or paid dividends or did both?
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