Slack is a partnership between two traders: Simon and Jack

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Slack is a partnership between two traders: Simon and Jack.

Simon and Jack each invested money in different commodity futures. Simon’s coffee trades can lose 3.5million Euros with probability 1/3 or earn a profit of 1 million Euros with probability 2/3. Jacks’s cereal trades can lose 1 million Euros with probability 1/4 or earn a profit of 1 million Euros with probability 3/4.

1. What is the probability that Slack’s profits will be non-negative

(larger than or equal to 0)?

2. What are Slack’s expected profits (in millions)?

3. If the coffee and cereal trades are statistically independent, what is

the probability that Slack’s profits will be exactly equal to zero?