In 38 of the 60 years from 1950 through 2009, the S&P 500 finished higher after the first five days of trading. In 33 of those 38 years, the S&P 500 finished higher for the year. Is a good first week a good omen for the upcoming year? The following table gives the first-week and annual performance over this 60-year period:

a. If a year is selected at random, what is the probability that the S&P 500 finished higher for the year?
b. Given that the S&P 500 finished higher after the first five days of trading, what is the probability that it finished higher for the year?
c. Are the two events "first-week performance" and "annual performance" independent? Explain.

Transcribed Image Text:

S&P 500'S ANNUAL PERFORMANCE FIRST WEEK Higher Lower Higher Lower I1