ExtraFerm Lager Beer Taste Study Results | CFA® Level 1 Exam Preparation

Probability of Not Finding ExtraFerm Lager Beer Bad Tasting

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Question

In a beer taste study involving the ExtraFerm lager beer, the following responses were recorded:

Response Frequency -

Great taste 103 -

Okay taste 46 -

Bad taste 64 -

The probability that a randomly selected beer drinker will NOT find ExtraFerm to be bad tasting is calculated from these data to be:

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Explanations

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Explanation

The probability that a randomly selected beer drinker will find ExtraFerm to be bad tasting is estimated from the above data as 64/(64 + 46 + 103) = 0.3. Therefore, the probability that a randomly selected beer drinker will NOT find ExtraFerm to be bad tasting equals 1 - 0.3 = 0.7. We could also have calculated this probability as (103 + 46)/(64 + 46 + 103) = 0.7 Note that given a frequency distribution, the estimated probability of a particular class/event occurring equals the relative frequency of that class.