SOLUTION: The increase or decrease in the price of a stock between the beginning and the end of a trading day is assumed to be an equally likely random event. What is the probability that a

Algebra ->  Probability-and-statistics -> SOLUTION: The increase or decrease in the price of a stock between the beginning and the end of a trading day is assumed to be an equally likely random event. What is the probability that a      Log On


   

Question 822985: The increase or decrease in the price of a stock between the beginning and the end of a trading day is assumed to be an equally likely random event. What is the probability that a stock will show a decrease in its closing price on three consecutive days?
The probability that a stock will show a decrease in its closing price on three consecutive days is?
Answer by stanbon(75887) About Me  (Show Source):
You can put this solution on YOUR website!
The increase or decrease in the price of a stock between the beginning and the end of a trading day is assumed to be an equally likely random event.
P(increase) = P(decrease) = 1/2
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What is the probability that a stock will show a decrease in its closing price on three consecutive days?
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Answer:: (1/2)^3 = 1/8
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Cheers,
Stan H.
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