The Fax Machine in an Office Is Very Unreliable

question 83

Short Answer

The fax machine in an office is very unreliable.If it was working yesterday, there is an 90% chance it will work today.If it was not working yesterday, there is a 5% chance it will work today.
(a)What is the probability that it is not working today, if it was not working yesterday?
(b)If it was working yesterday, what is the probability that it is working today?

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Definitions:

Coupon Rate

The interest rate on a bond which the issuer pays to the bondholders, generally fixed and paid at specific intervals.

Yield to Maturity

The total anticipated return on a bond if held to its maturity date, including all interest payments and capital gains or losses.

Required Rate of Return

The minimum return an investor expects to achieve by investing in a particular asset, taking into account the risk level of the investment.

Flotation Cost

Flotation Cost refers to the costs associated with issuing new securities, including underwriting fees, legal expenses, and registration fees.