Question

A recent survey reported in BusinessWeek dealt with the salaries of CEOs at large corporations and whether company shareholders made money or lost money.

	CEO Paid More Than $1 Million	CEO Paid Less Than $1 Million	Total
Shareholders made money	4	9	13
Shareholders lost money	6	4	10
Total	10	13	23

If a company is randomly selected from the list of 23 studied, calculate the probabilities for the following :

(a)	The CEO made more than $1 million. (Round your answer to 2 decimal places.)

Probability

(b)	The CEO made more than $1 million or the shareholders lost money. (Round your answer to 2 decimal places.)

Probability

(c)	The CEO made more than $1 million given the shareholders lost money. (Round your answer to 4 decimal places.)

Probability

(d)	Select two CEOs and find that they both made more than $1 million. (Round your answer to 4 decimal places.)

Answer 1

(A) favourable outcome for CEO made more than 1 million is 10

total number of outcome = 23

probability = (favourable outcome/total outcome)

= 10/23

= 0.4348

(B) CEO had made more than 1 milliion in 10 studies and shareholders had lost money in 10 studies

So, favourable outcome = 10+10 = 20

total outcome = 23

probability = (favourable outcome/total outcome)

= 20/23

= 0.8696

(C) number of studies where CEO made more than $1 million and the shareholders lost money = 6

favourable outcome = 6

number of shareholders lost money = 10

so, total outcome = 10

probability = (favourable outcome/total outcome)

= 6/10

= 0.6000

(D) using answer from part (A), probability that a CEO had made more than 1 million is 0.4348

probability that both CEO had made more than 1million = (0.4348*0.4348) = 0.1890