Credit derivatives are a new kind of investment instrument: they protect investors from risk. If such an investment offered by ABN Amro has a 90% chance of making money, another by AXA has a 75% chance of success, and one by the ING Group has a 60% chance of being profitable, and the three are independent of each other, what is the chance that at least one investment will make money?
Answer to relevant QuestionsIn problem 2-42, suppose that American investment institutions enter this new market, and that their probabilities for successful instruments are: Goldman Sachs ...... 70% Salomon Brothers ..... 82% Fidelity ...A device has three components and works as long as at least one of the components is functional. The reliabilities of the components are 0.96, 0.91, and 0.80. What is the probability that the device will work when needed? Megabucks is a lottery game played in Massachusetts with the following rules. A random drawing of 6 numbers out of all 36 numbers from 1 to 36 is made every Wednesday and every Saturday. The game costs $1 to play, and to win ...A chemical plant has an emergency alarm system. When an emergency situation exists, the alarm sounds with probability 0.95. When an emergency situation does not exist, the alarm system sounds with probability 0.02. A real ...Two stocks A and B are known to be related in that both are in the same industry. The probability that stock A will go up in price tomorrow is 0.20, and the probability that both stocks A and B will go up tomorrow is 0.12. ...
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