CFA Practice Question

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CFA Practice Question

An automatic machine inserts mixed vegetables into a plastic bag. Past experience revealed that some packages were underweight and some were overweight, but most had satisfactory weight.

Weight % of Total
Underweight 2.5
Satisfactory 90.0
Overweight 7.5

Three packages are selected from the food processing line. What is the probability of selecting and finding that all three of them are underweight?
A. 0.0000156
B. 0.075
C. 0.0000001
Explanation: P(all three underweight) = 0.025*0.025*0.025 = 0.0000156

User Contributed Comments 5

User Comment
chamad we have to be careful with calculator. Mine ave me 0 because setteled on 4 decimals
naomixs If you press 2nd Format on your BAII calculator you can increase the number of decimal places.
dash1s Why are these probabilities independent?
farhan92 well the probabilities are from past experience so wouldn't be adjusted.
nmech1984 Are independent because it says "from the processing line". So when you pick one, the sample is again the same size.
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