TABLE 5-2 a Certain Type of New Business Succeeds 60% of the of the Time

question 103

Short Answer

TABLE 5-2
A certain type of new business succeeds 60% of the time. Suppose that three such businesses open (where they do not compete with each other, so it is reasonable to believe that their relative successes would be independent).
-Referring to Table 5-2, the probability that all three businesses succeed is ________.

---

Definitions:

Option Values

The premium or price of an options contract, determined by factors including the underlying asset's price, strike price, and expiration date.

European Put

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

American Put

An option contract giving the holder the right, but not the obligation, to sell a specified amount of an underlying asset at a predetermined price before or on a specified date.

Real Option

The choice available to managers regarding business investments, such as expanding, deferring, or abandoning a project, based on changing conditions.