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 five consecutive days?
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Step-by-step explanation:
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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