What assumption did you have to make in answering part (a)(ii)?
How to approach this question
Think about how you combined the probabilities for month 1 and month 2. What rule did you use? What condition must be met for that rule to be valid?
Full Answer
In part (a)(ii), we calculated the probability of not selling in two consecutive months by multiplying the probability of not selling in one month by itself (0.75 × 0.75). This calculation method is only valid if we assume the two events are **statistically independent**. This means that the outcome of the first month (selling or not selling) has no effect on the probability of the outcome in the second month. In reality, this might not be true (e.g., a house being on the market for a month might make it less attractive to buyers), but it is a necessary assumption for this calculation.
Common mistakes
✗ Giving a vague answer like "the risk is the same". While true, the key statistical term is "independent".
✗ Stating an assumption about the price or the market in general, rather than the specific mathematical assumption needed for the calculation.
Expert