Question

Meagan Dubean manages a portfolio of 200 common stocks.  Her staff classified the portfolio stocks by 'industry sector' and 'investment objective.'

Investment	Industry Sector
Objective	Electronics	Airlines	Healthcare	Total
Growth	100	10	40	150
Income	20	20	10	50
Total	120	30	50	200

Which of the following statements is not true?

a) Growth and Income are complementary events.

b) Electronics and Growth are dependent.

c) Electronics and Healthcare are mutually exclusive.

d) Airlines and Healthcare are collectively exhaustive

Answer 1

Solution : Option D

Reason : Option D is not true; since Airlines and Healthcare are not collectively exhaustive. Both the sectors together contribute 80 stocks out of total 200 stocks managed by Meagan

"Collectively exhaustive" means that the two sectors together contribute to the Meagan Dubean portfolio of 200 common stocks i.e. all possible outcomes as per events in probability.

Other options a, b, c are all correct in the choices for the below reasons:

a) Growth and Income are complementary to each other, if one occurs and the other doesn't occur.

b) Electronics is the major driver for Growth objective ie. 100 out of 150 growth stocks & therefore dependent.

c) Electronics & Healthcare are mutually exclusive; since there are no commonality between these two industry sectors.