1. You are interested in finding out a patient's probability of having liver disease if they are an alcoholic. Past data tells you that 10% of patients entering your clinic have liver disease. Five percent of the clinic's patients are alcoholics. Among those patients diagnosed with liver disease, 7% are alcoholics.  
   What is a patient's probability of having liver disease if they are an alcoholic?  

2. Scores on a particular test are normally distributed with a standard deviation of 4 and a mean of 30. What is the probability of anyone scoring less than 40? 

 

3. Parker Department Stores has been hurt in recent months by a large increase in shoplifting losses. Parker's risk manager concluded that while the frequency of shoplifting losses was high, the severity is still relatively low. 
What is the appropriate risk management technique to apply to this problem? 

 

Acme Company has three identical manufacturing plants, one on the Texas Gulf Coast, one in southern Alabama, and one in Florida. Each plant is valued at $200 million. Acme's risk manager is concerned about the damage which could be caused by a single hurricane. The risk manager believes there is an extremely low probability that a single hurricane could destroy two or all three plants because they are located so far apart. 
What is the probable maximum loss associated with a single hurricane?