Question: When the stock market has a large 1 day decline does

When the stock market has a large 1-day decline, does it bounce back the next day or does the bad news endure? To answer this question, an economist examined a random sample of daily changes to the Toronto Stock Index (TSE). He recorded the percent change. He classified declines as:
Down by less than 0.5%
Down by 0.5% to 1.5%
Down by 1.5% to 2.5%
Down by more than 2.5%
For each of these days, he recorded the percent loss the following day. Do these data allow us to infer that there are differences in changes to the TSE depending on the loss the previous day?

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  • CreatedFebruary 03, 2015
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