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Q.

A stock market analyst examined the prospects of the shares of a large number of corporations when the performance of these stocks was investigated one year later, it turned out that 25% performed much better than the market average, 25%much worse and the remaining 50% about the same as the
average. Forty percent of the stocks that turned out to do much better than the market were rated good buys by the analyst, as were 20% of those that did about as well as the market and 10%of those that did much worse. The probability that a stock rated a good buy by the analyst, performed much better than the average is K then which of the following is/are false. 

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a

K>23

b

K<910

c

K>12

d

K<34

answer is A, B.

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Detailed Solution

K=(0.40)(0.25)(0.40)(0.25)+(0.20)(0.50)+(0.10)(0.25)=100225=49

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