1. XYZ Corporation announces its earnings four times per year. Based on historical data, you estimate that in any given quarter the probability that XYZ Corporation's earnings will exceed consensus estimates is 30%. Also, the probability of exceeding the consensus in any one quarter is independent of the outcome in any other quarter. What is the probability that XYZ Corporation will exceed estimates three times in a given year?

2. The market risk group at your firm has developed a Value at Risk (VaR) model. In Chapter 5 we examine VaR models more closely. In the meantime, assume the probability of an exceedance event on any given day is 5%, and the probability of an exceedance event occurring on any given day is independent of an exceedance event having occurred on any previous day. What is the probability that there are two exceedances over 20 days?