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Over the last 10 years, a company's annual earnings increased year over year seven times and decreased seven times. You decide to model the number
Over the last 10 years, a company's annual earnings increased year over year seven times and decreased seven times. You decide to model the number of earnings increases for the next ten years as a binomial random variable. (i) What is your estimate of the probability of success, defined as an increase in annual earnings? (5 marks) Assume that your estimated probability is the actual probability: (ii) What is the probability that earnings will increase in five of the next ten years? (10 marks) (iii) Calculate the expected number of yearly increases during the next ten years
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