SOA Exam P Sample Question 370
Study guide: Exam P-1
Small businesses in a particular city are categorized as retail, service, transportation, or other.
In a study of the yearly bankruptcies of small businesses in this city, the following information from the past year was observed:
i) 60% of the small businesses were retail, and of those, 12% went bankrupt. ii) 25% of the small businesses were service, and of those, 8% went bankrupt. iii) 10% of the small businesses were transportation, and of those, 6% went bankrupt. iv) 5% of the small businesses were other, and none of those went bankrupt.
An auditor randomly selected a small business that went bankrupt last year.
Calculate the probability that it was a service business.
- A)
0.020 - B)
0.080 - C)
0.204 - D)
0.250 - E)
0.308
Answer this question and see the worked solution