- CFA Exams
- CFA Level I Exam
- Study Session 2. Quantitative Methods (1)
- Reading 8. Probability Concepts
- Subject 4. Multiplication Rule for Independent Events

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**CFA Practice Question**

Main Street contains 8 traffic lights. The lights work independently of each other and the probability that one of the lights is green is 60%. The probability of travelling Main Street without stopping for a light is ______% (to the nearest 0.1%).

A. 16.7%

B. 0.1%

C. 1.7%

**Explanation:**Let x count the number of green lights. The random variable is binomial with N = 8 and p = 0.6. To go through town without stopping for a light, we need 8 green lights, P(x = 8) = P(8). Using the calculator and finding the distribution for x, we get P(8) = 0.0168 = 1.7% (to the nearest 0.1%).

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**User Contributed Comments**
2

User |
Comment |
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Shelton |
Pr(w/o stopping)=Pr(8 green)=0.6^8=0.0168 |

rjdelong |
thank you Shelton, much better explanation. Just out of curiosity, how would one type in the calculator this binomial deal he's talking about? |