Probability of Selecting Absent Production Employees - CFA Level 1 Exam Prep

Probability of Selecting 10 Absent Production Employees

Prev Question Next Question

Question

On a very hot summer day, 5 percent of the production employees at Midland States Steel are absent from work. The production employees are to be selected at random for a special in depth study on absenteeism. What is the probability of selecting 10 production employees at random on a hot summer day and finding that none of them are absent?

Answers

Explanations

Click on the arrows to vote for the correct answer

A. B. C. D. E.

A

This is a binomial probability. The probability of getting r successes out of n trials where the probability of success each trial is p and probability of failure each trial is q (where q = 1-p) is given by: n!(p^r)[q^(n-r)]/r!(n-r)!. Here n = 10, r = 0,p = 0.05 and q = 0.95. Therefore we have 10!(0.05^0)(0.95^10)/0!10! = 0.599.