Company A has probability .07 of defaulting. Company B has probability of .001 ofdefaulting. Assume that the event that company A defaults is independent of the eventthat company B defaults.a) What is the probability that both company A and company B defaults?b) What is the probability that either company A or company B or both default?

(a) Obtain the probability that both company A and company B defaults. The probability that both…

Answered: Company A has probability .07 of…

A First Course in Probability (10th Edition)

10th Edition

ISBN:9780134753119

Author:Sheldon Ross

Publisher:Sheldon Ross

Chapter1: Combinatorial Analysis

Section: Chapter Questions

Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...

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A company prices its tornado insurance using the following assumptions:• In any calendar year, there can be at most one tornado.• In any calendar year, the probability of a tornado is 0.08.• The number of tornadoes in any calendar year is independent of the number of tornados in any other calendar year.Using the company's assumptions, calculate the probability that there are fewer than 4 tornadoes in a 22-year period.
Company A has probability .01 of defaulting, company B has probability .005 of default- ing, if company A defaults the probability that company B defaults increases to .02. a) What is the probability that both company A and company B default? b) If company B defaults what is the probability that company A will default as well?
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