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Christine Farr

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ADM2303Assignment#3 (28 Marks)Fall 2015Question#1: (6 marks)a. 'Computer Repair Services' receives on average, 4 service calls every hour. Calculate thefollowing probabilities.i. There will be no service call in the first 20 minutes.ii. There will be a service call for the first time between 21 and 33 minutes.b. The "Mean Time Between Failure" also known as MTBF for a given electronic equipment is 3years.i. Calculate the probability that the equipment will fail for the first time between the second andthird year.ii. If only 10% of the equipment is expected to fail by the end of the first year, what should bethe MTBF for this electronic equipment?iii. From what you calculated in part "ii." of this sub-question, describe in your words theimportance of quality control and warranty based recalls of the equipment produced.Question#2: (6 marks)Large investment banks do massive amount of electronic trading based on some verysophisticated software they develop and use effectively. Individual investors do not have thebenefit of such dedicated specialized software and as such, when they do on-line trading, theirsuccess rate is about 30%. If an individual engages in on-line trading for 100 times, calculate:a. the expected value and standard deviation of the number of successful trades.b. the approximate probability that more than 36 trades will be successful.c. what conditions need to be satisfied and corrections to be used do the calculation in part "ii"above.d. Calculate the precise value of the probability by using MiniTab and an appropriatedistribution.e. If % error is defined as (Approximate Value - Precise Value)/(Precise Value)* 100, calculatethis % error and comment on your calculation based on approximate method. How good is yourapproximation?Question#3: (9 marks)Here ROI stands for "Return On Investment" in dollars, and f[x1∩y1] stands for P[x1∩y1].X: RV indicating ROI/unit of Investment of one typeY: RV indicating ROI/unit of investment of another typeFollowing is the relevant information giving the "Joint" and "Marginal" probabilities (also calleddistributions) for the two investment types, X and Y.

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