John Runs a Computer Software Store

question 16

Multiple Choice

John runs a computer software store. He counted 124 people who walked by his store in a day, 54 of whom came into the store. Of the 54, only 22 bought something in the store. Estimate the probability that a person who walks into the store will buy something. Round your answer to the nearest hundredth.

• A)0.61
• B)0.41
• C)0.18
• D)0.44
• E)none of these choices

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Definitions:

Option Contract

A financial derivative that gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a set price within a specific period.

European Option

A type of option contract that can only be exercised at the expiration date, not before.

American Option

A type of options contract that allows holders to exercise their right to buy or sell the underlying asset at any time before the expiration date.

European Option

A type of financial derivative that gives an investor the right, but not the obligation, to buy or sell an asset at a specified price on the option's expiration date.