Chapter 8.3, Problem 51E

Internet Investments in the 1990s The following excerpt is from an article in The New York Times in July 1999:³⁵

While statistics are not available for web entrepreneurs who fail, the venture capitalists that finance such Internet start-up companies have a rule of thumb. For every 10 ventures that receive financing—and there are plenty that do not—2 will be stock market successes, which means spectacular profits for early investors;

3 will be sold to other concerns, which translates into more modest profits; and the rest will fail.

a. What is a sample space for the scenario?

b. Write down the associated probability distribution.

c. What is the probability that a start-up venture that receives financing will realize profits for early investors?