A Certain Product Is Comprised of Two Components: X and Y.Component

question 49

Short Answer

A certain product is comprised of two components: X and Y.Component X has a random failure rate of one in every ten years,while component Y's random failure rate is one in every five years.This product has a mean time to wear-out of eight years with a standard deviation of one year.What is the probability that this product will fail within eight years? Nine years? Six years?

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Definitions:

Market Rate

The prevailing interest rate available in the marketplace for loans, savings, and investments, also reflecting the cost of borrowing money.

Weighted Average Cost

The calculation that takes into account the varying costs of goods and the quantity of each, to determine an average cost.

Preferred Stock

A class of stock that typically has a priority claim on dividends and assets in the event of liquidation over common stock.

Yield

The income return on an investment, such as the interest or dividends received, expressed as an annual percentage of the investment’s cost.