Hooloovoo Posted November 8, 2010 Share Posted November 8, 2010 Can't get my head around the maths :$ If there is 5% possibility that the bank will bust in a month, what is the probability that it will NOT bust over a period of 3 months? I first thought it would be (1-0.05^3) = 0.9996 = 99.9% But i think that is rather the possibility that it would not bust "every month", i.e. that this 5% would strike every month. ....help? :tongue2 Quote Link to comment Share on other sites More sharing options...
Deleted Posted November 8, 2010 Share Posted November 8, 2010 (edited) Deleted Edited May 4, 2020 by Deleted Deleted Quote Link to comment Share on other sites More sharing options...
Hooloovoo Posted November 8, 2010 Author Share Posted November 8, 2010 Re: Risk of ruin, probabilities? 0.95 NOT bust 1st month * 0.95 NOT bust 2nd month * 0.95 NOT bust 3rd month = 0.95*0.95*0.95 => 0.857375 Thanks cyraxro, it's obvious when you see it in print :lol Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.