ISDS Exam 2 – practice exam questions with answers and structured revision
material
subjective probability - correct answer ✔✔the individual's personal estimate of the chance of
loss
- correct answer ✔✔assigned to an event by drawing on logical analysis
sample space - correct answer ✔✔the set of all possible outcomes
There is a 25% chance that a customer who purchases milk will also purchase bread. The
probability of a milk purchase is 70% and the probability of a bread purchase is 50%. What is the
probability that a customer will purchase bread given that he/she buys milk? - correct answer
✔✔.36
P(milk and bread) = 0.25; P(milk) = 0.7; P(bread) = 0.5. P(bread | milk) = P(milk and
bread)/P(milk) = 0.25/0.7 = 36%.
Additional Rule - correct answer ✔✔P(A∪B)=P(A)+P(B)−P(A∩B)P(A∪B)=P(A)+P(B)−P(A∩B)
complement rule - correct answer ✔✔P(A)=1−P(Ac)
What is the probability that neither fund will rise in price? - correct answer ✔✔1 − (A∪B)
1 − (0.40 + 0.20 − 0.40 × 0.60)
Peter applied to an accounting firm and a consulting firm. He knows that 30% of similarly
qualified applicants receive job offers from the accounting firm, while only 20% of similarly
qualified applicants receive job offers from the consulting firm. Assume that receiving an offer
from one firm is independent of receiving an offer from the other. What is the probability that
both firms offer Peter a job? - correct answer ✔✔.30 x .20 =
material
subjective probability - correct answer ✔✔the individual's personal estimate of the chance of
loss
- correct answer ✔✔assigned to an event by drawing on logical analysis
sample space - correct answer ✔✔the set of all possible outcomes
There is a 25% chance that a customer who purchases milk will also purchase bread. The
probability of a milk purchase is 70% and the probability of a bread purchase is 50%. What is the
probability that a customer will purchase bread given that he/she buys milk? - correct answer
✔✔.36
P(milk and bread) = 0.25; P(milk) = 0.7; P(bread) = 0.5. P(bread | milk) = P(milk and
bread)/P(milk) = 0.25/0.7 = 36%.
Additional Rule - correct answer ✔✔P(A∪B)=P(A)+P(B)−P(A∩B)P(A∪B)=P(A)+P(B)−P(A∩B)
complement rule - correct answer ✔✔P(A)=1−P(Ac)
What is the probability that neither fund will rise in price? - correct answer ✔✔1 − (A∪B)
1 − (0.40 + 0.20 − 0.40 × 0.60)
Peter applied to an accounting firm and a consulting firm. He knows that 30% of similarly
qualified applicants receive job offers from the accounting firm, while only 20% of similarly
qualified applicants receive job offers from the consulting firm. Assume that receiving an offer
from one firm is independent of receiving an offer from the other. What is the probability that
both firms offer Peter a job? - correct answer ✔✔.30 x .20 =
