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Question

An audit database holds 20 records, of which 8 have a red compliance flag. An auditor draws 7 records uniformly without replacement and seals them in a bundle. A second auditor then chooses 3 of those 7 uniformly at random to open. Exactly 2 of the 3 opened records are red.

The remaining 4 records in the bundle stay sealed. Conditional on what was revealed, what is the probability that at least two of those four sealed records are red? Show why the first draw of seven and the later random disclosure cannot be treated as seven independent draws with replacement.

Hint 1

Once the three opened records are known to contain two red and one unflagged record, how many red and unflagged records remain among the seventeen unopened records in the original database?

By exchangeability, the four still-sealed bundle positions form a uniform four-record selection from those seventeen. Use a hypergeometric count for two, three or four red flags.

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