Question

One theory concerning the Dow Jones Industrial Average is that it is likely to increase during U. S. presidential election years. From 1964 through 2012, the Dow Jones Industrial Aver-age increased in 10 of the 13 U. S. presidential election years. Assuming that this indicator is a random event with no predictive value, you would expect that the indicator would be correct 50% of the time.
a. What is the probability of the Dow Jones Industrial Average in-creasing in 10 or more of the 13 U. S. presidential election years if the probability of an increase in the Dow Jones Industrial Average is 0.50?
b. What is the probability that the Dow Jones Industrial Average will increase in 10 or more of the 13 U. S. presidential election years if the probability of an increase in the Dow Jones Indus-trial Average in any year is 0.75?


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  • CreatedJuly 16, 2015
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