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cccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccc1. The
increase or decrease in the price of a stock between the beginning and the
end of a trading day is assumed to be an equally likely random event. What
is the probability that a stock will show an increase in its closing price on five
consecutive days?

2. The U.S. Department of Transportation reported that in 2009, Southwest

led all domestic airlines in on-time arrivals for domestic flights, with a rate of
0.825. Using the binomial distribution, what is the probability that in the next
six flights
a. four flights will be on time?
b. all six flights will be on time?
c. at least four flights will be on time?
d. What are the mean and standard deviation of the number of on-time
arrivals?

3. A student is taking a multiple-choice exam in which each question has four

choices. Assume that the student has no knowledge of the correct answers
to any of the questions. She has decided on a strategy in which she will place
four balls (marked A, B, C and D) into a box. She randomly selects one ball
for each question and replaces the ball in the box. The marking on the ball
will determine her answer to the question. There are five multiple-choice
questions on the exam. What is the probability that she will get
a. five questions correct?
b. at least four questions correct?
c. no questions correct?

d. no more than two questions correct?

4. Investment advisors agree that near-retirees, defined as people aged 55 to 65, should
have balanced portfolios. Most advisors suggest that the near-retirees have no more
than 50% of their investments in stocks. However, during the huge decline in the stock
market in 2008, 22% of near retirees had 90% or more of their investments in stocks.
Suppose you have a random sample of 10
people who would have been labeled as near-retirees in 2008. What is the probability
that during 2008:
a. none had 90% or more of their investment in stocks?
b. exactly one had 90% or more of his or her investment in stocks?
c. two or fewer had 90% or more of their investment in stocks?
d. three or more had 90% or more of their investment in stocks?
5. When a customer places an order with Rudys On-Line Office Supplies, a
computerized accounting information system (AIS) automatically checks to see if the
customer has exceeded his or her credit limit. Past records indicate that the probability
of customers exceeding their
credit limit is 0.05. Suppose that, on a given day, 20 customers place orders. Assume
that the number of customers that the AIS detects as having exceeded their credit limit
is
distributed as a binomial random variable.
a. What are the mean and standard deviation of the number of customers exceeding
their credit limits?
b. What is the probability that zero customers will exceed their limits?
c. What is the probability that one customer will exceed his or her limit?
d. What is the probability that two or more customers will exceed their limits?

6. Assume that the number of network errors experience in a day on a local area
network (LAN) is distributed as a Poisson random variable. The mean number of network
errors experienced in a day is 2.4. What is the probability that in any given day
a. zero network errors will occur?
b. exactly one network error will occur?
c. two or more network errors will occur?
d. fewer than three network errors will occur?

7. The U.S. Department of Transportation maintains statistics for mishandled

bags per 1,000 airline passengers. In the first nine months of 2009, airlines

had mishandled 3.89 bags per 1,000 passengers. What is the probability that
in the next 1,000 passengers, airlines will have:
a. no mishandled bags?
b. at least one mishandled bag?
c. at least two mishandled bags?
8. The U.S. Department of Transportation maintains statistics for consumer
complaints per 100,000 airline passengers. In the first nine months of 2009,
consumer complaints were 0.99 per 100,000 passengers. What is the
probability that in the next 100,000 passengers, there will be
a. no complaints?
b. at least one complaint?
c. at least two complaints?
9. A toll-free phone number is available from 9 A.M. to 9 P.M. for your
customers to register complaints about a product purchased from your
company. Past history indicates that an average of 0.8 calls is received per
minute.
What properties must be true about the situation described here in order to
use the Poisson distribution to calculate probabilities concerning the number
of phone calls received in a one-minute period?
10. Suppose that the probabilities of a customer purchasing 0, 1, or 2 books
at a book store are 0.2, 0.4, and 0.4, respectively. What is the expected
number of books a customer
will purchase?
11. A day trader buys an option on a stock that will return $100 profit if the
stock goes up today and lose $400 if it goes down. If the trader thinks there
is a 75% chance that the stock will go up,
a) What is her expected value of the options profit?
b) What do you think of this option?
12 Find the standard deviation of the book purchases in exercise 10.
13. A small software company will bid on a major contract. It anticipates a
profit of $50,000 if it gets it, but thinks there is only a 30% chance of that
happening.
a) Whats the expected profit?
b) Find the standard deviation for the profit.

14. A commuter must pass through five traffic lights on her way to work and
will have to stop
at each one that is red. After keeping record for several months, she
developed the following probability model for the number of red lights she
hits:
X = # of
Red
P(X = x)

0.05

0.25

0.35

0.15

0.15

0.05

a) How many red lights should she expect to hit each day?
b) Whats the standard deviation?
15. A consumer organization inspecting new cars found that many had
appearance defects (dents, scratches, paint chips, etc.). While none had
more than three of these defects, 7% had three, 11% had two, and 21% had
one defect.
a) Find the expected number of appearance defects in a new car.
b) What is the standard deviation?
16. Your company bids for two contracts. You believe the probability that you
get contract #1 is 0.8. If you get contract #1, the probability that you also
get contract #2 will be 0.2, and if you do not get contract #1, the probability
that you get contract #2 will be 0.3.
a) Are the outcomes of the two contract bids independent? Explain.
b) Find the probability you get both contracts.
c) Find the probability you get neither contract.
d) Let X be the number of contracts you get. Find the probability model for X.
e) Find the expected value and standard deviation of X.
17. Can we use probability models based on Bernoulli trials to investigate the
following situations? Explain.
a) Each week a doctor rolls a single die to determine which of his six office
staff members gets the preferred parking space.
b) A medical research lab has samples of blood collected from 120 different
individuals. How likely is it that the majority of them are Type A blood, given
that Type A is found
in 43% of the population?
c) From a workforce of 13 men and 23 women, all five promotions go to men.
How likely is that, if promotions are based on qualifications rather than
gender?

d) We poll 500 of the 3000 stockholders to see how likely it is that the
proposed budget will pass.

18. Can we use probability models based on Bernoulli trials to investigate the
following situations? Explain.
a) You are rolling 5 dice. How likely is it to get at least two 6s to win the
game?
b) You survey 500 potential customers to determine their color preference.
c) A manufacturer recalls a doll because about 3% have buttons that are not
properly attached. Customers return 37 of these dolls to the local toy store.
How likely are they to find any buttons not properly attached?
d) A city council of 11 Republicans and 8 Democrats picks a committee of 4
at random. How likely are they to choose all Democrats?
e) An executive reads that 74% of employees in his industry are dissatisfied
with their jobs. How many dissatisfied employees can he expect to find
among the 481 employees in his company?
19. An insurance company needs to assess the risks associated with
providing hurricane insurance. Between 1990 and 2006, Florida was hit by 22
tropical storms or hurricanes. If tropical storms and hurricanes are
independent and the mean has not changed, what is the
probability of having a year in Florida with each of the following. (Note that
1990 to 2006 is 17 years.)
a) No hits?
b) Exactly one hit?
c) More than three hits?
20. Between 1965 and 2007, there were 95 major hurricanes (category 3 or
more) in the
Atlantic basin. Assume that hurricanes are independent and the mean has
not changed.
a) What is the mean number of major hurricanes per year? (There are 43
years from 1965 to 2007.)
b) What is the standard deviation of the frequency of major hurricanes?
c) What is the probability of having a year with no major hurricanes?
d) What is the probability of going three years in a row without a major
hurricane?

21. Professional tennis. Serena Williams made a successful first serve 67%
of the time in a Wimbledon finals match against her sister Venus. If she
continues to serve at the same rate the next time they play and serves 6
times in the first game, determine the following probabilities. (Assume that
each serve is independent of the others.)
a) All 6 first serves will be in.
b) Exactly 4 first serves will be in.
c) At least 4 first serves will be in.
22. Only 4% of people have Type A blood. A bloodmobile has 12 vials of
blood on a rack. If the
distribution of blood types at this location is consistent with the general
population, whats the probability they find AB blood in:
a) None of the 12 samples?
b) At least 2 samples?
c) 3 or 4 samples?
23. A website manager has noticed that during the evening hours, about 3
people per minute check out from their shopping cart and make an online
purchase. She believes that each purchase is independent of the others and
wants to model the number of purchases per
minute.
a) What model might you suggest to model the number of purchases per
minute?
b) What is the probability that in any one minute at least one purchase is
made?
c) What is the probability that no one makes a purchase in the next 2
minutes?
24. A discrete random variable can have the values x = 3, x = 8, or x = 10,
and the respective probabilities are 0.2, 0.7, and 0.1. Determine the mean,
variance, and standard deviation of x.
25. A regional manager visits local fast-food franchises and evaluates the
speed of the service. If the manager receives her meal within 45 seconds,
the server is given a free movie-admission coupon. If it takes more than 45
seconds, the server receives nothing. Throughout the companys franchises,
the probability is 0.60 that a meal will be served within 45 seconds. What is
the expected number of coupons a counter employee will receive when
serving the regional manager?

26. A contractor must pay a $40,000 penalty if construction of an expensive

home requires more than 16 weeks. He will receive a bonus of $10,000 if the
home is completed within 8 weeks. Based on experience with this type of
project, the contractor feels there is a 0.2 chance the home will require more
than 16 weeks for completion, and there is a 0.3 chance it will be finished
within 8 weeks. If the price of the home is $350,000 before any penalty or
bonus adjustment, how much can the buyer expect to pay for her new home
when it is completed?
27. A music shop is promoting a sale in which the purchaser of a compact
disk can roll a die, then deduct a dollar from the retail price for each dot that
shows on the rolled die. It is equally likely that the die will come up any
integer from 1 through 6. The owner of the music shop pays $5.00 for each
compact disk, then prices them at $9.00. During this special promotion, what
will be the shops average profit per compact disk sold?

28. In the town of Hickoryville, an adult citizen has a 1% chance of being

selected for jury duty next year. If jury members are selected at random, and
the Anderson family includes three adults, determine the probability that
a. none of the Andersons will be chosen.
b. exactly one of the Andersons will be chosen.
c. exactly two of the Andersons will be chosen.
d. all three Andersons will be chosen.
29. Alicias schedule includes three Tuesday/Thursday courses in which each
professor uses a single coin flip to decide whether to give a short quiz each
class day. What is the probability that Alicia will be lucky and have no
surprise quizzes tomorrow? What is the probability that the worst will occur
and she will have surprise quizzes in all three classes? What is the
probability that she will escape with minimal damage and have a quiz in only
one of the three classes?

30. Over the past year, a universitys computer system has been struck by a
virus at an average rate of 0.4 viruses per week. The universitys information
technology managers estimate that each time a virus occurs, it costs the
university $1000 to remove the virus and repair the
damages it has caused. Assuming a Poisson distribution, what is the
probability that the university will have the good fortune of being virus-free
during the upcoming week? During this same week, what is the expected
amount of money that the university will have to spend

for virus removal and repair?

31. Taxicab drivers are more likely to be murdered on the job than members
of any other occupation, even police officers and security guards. The annual
murder rate for cab drivers is 30.0 homicides per 100,000 workers,
compared to just 0.6 per 100,000 for all occupations.
Assume that taxicab companies in a large Northeastern city employ a total of
3000 drivers and that the family of any driver murdered on the job receives
$50,000 from the city. What is the probability that at least two of the citys
taxicab drivers will be murdered on the job during the
next year? What is the approximate expected value for the amount of money
the city will be providing to families of murdered taxicab drivers during the
next year?
32. A manufacturing plants main production line breaks down an average of
2.4 times per day. Whenever the line goes down, it costs the company $500
in maintenance, repairs, and lost production. What is the probability that the
production line will break down at least 3
times tomorrow? What is the approximate expected value for the amount of
money that production line breakdowns will cost the company each day?