CFA Practice Question

CFA Practice Question

An analyst wishes to select stocks that meet four requirements. The total number of firms is 10,000. Fraction of firms meeting the 1st, 2nd, 3rd and 4th requirements are 50%, 30%, 25% and 40% respectively. Whether a firm meets one requirement is independent of it meeting other requirements (satisfying requirements are uncorrelated for different requirements). The expected number of firms that the analyst will meet all four requirements are:
A. 150
B. 2,500
C. 5,000
Explanation: The probability of meeting all 4 requirements = 0.5 * 0.3 * 0.25 * 0.40 = 0.015, so total number of firms are: 10,000 * 0.015 = 150

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