It Is Assumed That the Time Between Failures for an Electronic

question 21

Multiple Choice

It is assumed that the time between failures for an electronic component are exponentially distributed with a mean of 50 hours between consecutive failures. Based on this information, what is the probability that a randomly selected part will fail in less than 10 hours?

• A) about 0.18
• B) about 0.82
• C) about 0.20
• D) about 0.002
• E) about 0.33

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Definitions:

Treasury-Bill Rate

The interest rate yield on U.S. government short-term debt securities known as treasury bills.

Reward-to-Variability Ratio

This ratio, often called the Sharpe ratio, measures the return of an investment relative to its risk, whereby a higher ratio indicates a more desirable outcome.

Risk-Free Asset

An investment perceived to have no risk of financial loss, often exemplified by government bonds.

Expected Return

The anticipated return on an investment based on the probabilities of various outcomes, factoring in both potential gains and losses.