A production process is known to produce a particular item in such a way that 5 percent of these 2) are defective. If two items are randomly selected as they come off the production line, what is the probability that the second item will be defecfive

0.05

Step-by-step explanation:

Two items selected randomly :

5/100 =0.05

required rate of return = 0.166 = 16.6%

step-by-step explanation:

under the capital asset pricing model (capm), the required or expected rate of return for a particular security or asset is given using the formula:

required rate of return = risk-free rate + beta*(market risk premium)

we are given that;

risk-free rate = 4% = 0.04

beta = 1.4

market risk premium = 9% = 0.09

we simply plug these values into the above formula;

required rate of return = 0.04 + 1.4*(0.09)

required rate of return = 0.04 + 0.126

required rate of return = 0.166 = 16.6%