1. A person has invested $5,000 in the stock market. At the end of the first year the amount has grown to $6,250; he has had a 25 percent profit. If at the end of the second year his principal has grown to $8,750, the rate of increase is 40 percent for the year. What is the average rate of increase of his investment during the two years?
2. In each of the following cases, indicate whether classical, empirical, or subjective probability is used.

1. Last semester, 90 students registered for BUS 511 at NSU. Twelve students earned an A. Based on this information, we estimate the likelihood a student will earn an A is 0.1333.
2. A sevenmember committee of students is formed to study environmental issues. What is the likelihood that any one of the seven is chosen as the spokesperson?
3. There is a 70 percent chance that a newlydeveloped product will have sales of more than 1 million units.
4. Consider an experiment of rolling a sixsided die. The probability of the event "an even number of spots appear face up" is 0.5.

3. From past experience, a stockbroker believes that under present economic conditions a customer will invest in taxfree bonds with a probability of 0.6, will invest in mutual funds with a probability of 0.3, and will invest in both taxfree bonds and mutual funds with a probability of 0.15. At this time, find the probability that a customer will invest in either taxfree bonds or mutual funds.