CFA Practice Question

There are 434 practice questions for this study session.

CFA Practice Question

MRC produces chips with a defective rate of 15%. For an random sample of 20 chips from MRC, let X count the number of defective chips in the sample (and assume x is a binomial random variable), P(X < 2) = ______ (to nearest 0.001).
A. 3.9%
B. 17.6%
C. 30%
Explanation: Binomial random variable X has N = 20 and p = 0.15. Using the calculator, we find P(X < 2) = p(0) + p(1) = 0.0387 + 0.1368 = 0.1755 = 17.6% (to the nearest 0.1%).

User Contributed Comments 8

User Comment
Pooh use the binomial random variable probability formula
andy4cfa p(0)= power(.85,20) = 0.0387
p(1)= power(.85,19)*.0.15*20 = 0.1368
schandri what calculator are we talking about??
what's power function?
thanks Binomial Probability = rCn * p^r * (1-p)^(n-r)
p(0) = 1 * 0.15^0 * 0.85^20 = 1 * 1 * 0.0387
p(1) = 20 * 0.15^1 * 0.85^19 = 0.1368
p(X<2) = p(0) + p(1) = 0.0387 + 0.1368 = 0.1756%
chamad Am I missing any way to do it through BAII?
Gooner7 damn that wasnt that hard!
thekobe remember the binomial function formula n!/(n-r!)r!* (p^r*(1-p)^n-r) in this case you have to evaluate the cases that are less than 2, that is 0 and 1. for 0 you have n= 20 r =0, for 1 you have n=20 r=1
safash Binomial formula rules!!!!!!!!!!!
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