Between 1896—when the Dow Jones index was created— and 2012, the index rose in 65% of the years. Based on this information, and
assuming a binomial distribution, what do you think is the probability that the stock market will rise a) next year? b) the year after next? c) in four of the next five years? d) in none of the next five years? e) For this situation (modeling Dow Jones index), what assumption of the binomial distribution might not be valid? Are the years independent?
1 answer:
Answer:
a) P(x) = 0.67
b) P(y) = 0.67
c) P(x=4) = 0.3325
d) P( x = 0 ) = 0.0039
e) The fact that the rise and fall of the stock market relies on market sentiments violates independence used in Binomial distribution and the years are independent
Step-by-step explanation:
A) The probability that the stock market will rise next year = P(x) = 0.67
assuming next year to be X
B) Probability that the stock market will rise the year after next year
= P(y) = 0.67 and this is because the probability is independent of that of the previous years
C) Probability that the stock market will rise in four of the next five years
= P(x=4) = 0.3325
D) probability that the stock market will rise in none of the next five years
= P( x = 0 ) = 0.0039
E) The fact that the rise and fall of the stock market relies on market sentiments violates independence used in Binomial distribution and the years are independent
You might be interested in
Answer:
Option D. 8 units
Step-by-step explanation:
step 1
Find the area of rectangle
The area of rectangle is
step 2
Find the length side of the square with the same area of rectangle
The area of a square is
where
b is the length side of the square
we have
substitute
take the square root both sides
therefore
The length side of the square is 8 units
Answer:
RS = 75.3
Step-by-step explanation:
You need to set up the proportion of corresponding sides.
7(RS) = 31(17)
= 527
RS = 527/7 = 75.2857...
= 75.3
Answer:
The actual SAT score is 2024.
The equivalent ACT score is 29.49.
Step-by-step explanation:
Normal Probability Distribution:
Problems of normal distributions can be solved using the z-score formula.
In a set with mean and standard deviation
, the z-score of a measure X is given by:
The Z-score measures how many standard deviations the measure is from the mean. After finding the Z-score, we look at the z-score table and find the p-value associated with this z-score. This p-value is the probability that the value of the measure is smaller than X, that is, the percentile of X. Subtracting 1 by the p-value, we get the probability that the value of the measure is greater than X.
SAT score that is in the 95th percentile
Scores on the SAT test are normally distributed with a mean of 1511 and a standard deviation of 312, which means that
95th percentile is X when Z has a pvalue of 0.95, so X when Z = 1.645. The score is:
The actual SAT score is 2024.
Equivalent ACT score:
The equivalent ACT score is the 95th percentile of ACT scores.
Scores on the ACT test are normally distributed with a mean of 21.1 and a standard deviation of 5.1, which means that . So
The equivalent ACT score is 29.49.