Suppose that start-up companies in the area of biotechnology have probability 0.2 of becoming profitable, and that those in the area of information technology have probability 0.15 of becoming profitable. A venture capitalist invests in one firm of each type. Assume the companies function independently What is the probability that both companies become profitable?

The probability that both companies become profitable is 0.03 or 3%.

Step-by-step explanation:

1. Let's review the information given to us to answer the question correctly:

Probability of biotechnology start-up company of becoming profitable = 0.2

Probability of information technology start-up company of becoming profitable = 0.15

2. Assume the companies function independently What is the probability that both companies become profitable?

We will answer this question, assuming these are independent events, this way:

Probability that both companies become profitable = Probability of biotechnology start-up company of becoming profitable * Probability of information technology start-up company of becoming profitable

Replacing with the values given, we have:

Probability that both companies become profitable = 0.2 * 0.15 = 0.03

The probability that both companies become profitable is 0.03 or 3%.