Each Computer Component That the Peggos Company Produces Is Tested

question 98

Multiple Choice

Each computer component that the Peggos Company produces is tested twice before it is shipped. There is a 0.7 probability that a defective component will be so identified by the first test and a 0.8 probability that it will be identified as being defective by the second test. What is the probability that a defective component will not be identified as defective before it is shipped? ​

• A)Pr(not identified) = 0.560
• B)Pr(not identified) = 0.100
• C)Pr(not identified) = 0.060
• D)Pr(not identified) = 0.500
• E)Pr(not identified) = 0.240

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Definitions:

Eurodollars

Dollar-denominated deposits at foreign banks or foreign branches of American banks.

Futures Contract

An agreement to buy or sell a particular commodity or financial instrument at a predetermined price at a specified time in the future.

CAPM

The Capital Asset Pricing Model, a theoretical framework used to determine the expected return on an investment, considering risk and the time value of money.

APT

Stands for Arbitrage Pricing Theory, a financial model that estimates the returns on assets based on their risk relative to macroeconomic factors.