An insurance agent has appointments with four prospective clients tomorrow. From past experience the agent knows that the probability of making a sale on any appointment is one out of five. Using the rules of probability,what is the likelihood that the agent will sell a policy to three of the four prospective clients?
A)0.250
B)0.500
C)0.410
D)0.026

Question

Quizplus · Accepted Answer

The likelihood of the agent making a sale on any appointment is 1/5. Hence, the probability of making a sale in three out of four appointments is (1/5)^3 * (4/5). This is because the agent needs to make a sale in three out of four appointments and not make a sale in the remaining one appointment. Simplifying this gives 0.00032 or 0.032%. Rounded to the nearest thousandth, this is 0.026. Therefore, the answer is D.

An Insurance Agent Has Appointments with Four Prospective Clients Tomorrow