Probability that the stock market will rise next year

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Reference no: EM131688954

Question: Between 1872 and 2000, stock prices rose in 74% of the years (M. Hulbert, The Stock Market Must Rise in 2002? Think Again, The New York Times, December 6, 2001, Business, p. 6). Based on this information, and assuming a binomial distribution, what do you think the probability is 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, what assumption of the binomial distribution might not be valid?

Reference no: EM131688954

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