Often in the financial media, you will hear people make reference to specific times of the...
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Often in the financial media, you will hear people make reference to specific times of the week, month, or year that typically provide bullish or bearish conditions. One of the historical realities of the stock market is that it typically has performed poorest during the month of September. The Stock Trader's Almanac reports that, on average, September is the month when the stock market's three leading indexes usually perform the poorest. Some have dubbed this annual drop-off as the "September Effect." The September Effect is a market anomaly and not related to any particular market event or news. The September Effect is not limited to U.S. stocks, but is associated with most worldwide markets as well. A "down month" for the stock market means that, on the whole, the prices of stocks have declined from the previous month. Based on an analysis of market trends over the last 80 years the probability that September is a down month is 0.64. Furthermore, if September is an up month, the probability that October will be a down month is 0.33. However, if September is a down month, then the probability that October will be a down month is 0.56. Let S = September is a down month and O=October is a down month. Use this information to answer the following questions. (a) Are the events S and O independent? Why or why not? (Select all that apply.) P(O)=P(OS) Yes. P(O) = P(O(S) The probability that October is a down month does NOT change depending on whether September is a down month. The probability that October is a down month changes depending on whether September is a down month. No. (b) What is the probability that both September and October will be down months? (Round your answer to four decimal places) Complement P(Sno) Intersection Union Union P((SUO)) P(SO) P(sno) P(SUO) Disjoint P(SC) (c) What is the probability that September will be a down month, but October will not? (Round your answer to four decimal places) Identify the correct notation AND terminology for the probability you calculated immediately above. (Select any term that is applicable) (Select all that apply.) P(Sno Intersection P((SUO)) Union P(SC) P(SO) Disjoint Complement P(SNO) P(SUO) (d) What is the probability that either September or October or both will be a down month? (HINT: Did we give you enough information to use one of the formulas we discussed in class to compute this probability? If not, use the Tree Diagram approach.) (Round your answer to four decimal places) Identify the correct notation AND terminology for the probability you calculated immediately above. (Select any term that is applicable) (Select all that apply.) P(Sno) P(SO) P(SNO) Disjoint Union Complement P(SC) P(SUO) P((SUO) Intersection (e) What is the probability that neither September nor October will be a down month? (Round your answer to four decimal places) Identify the correct notation AND terminology for the probability you calculated immediately above. (Select any term that is applicable) (Select all that apply.) Complement Union P(SO) Disjoint P(SnoS) P(SUO) P(Sno) P((SUO)) Intersection P(SC) Often in the financial media, you will hear people make reference to specific times of the week, month, or year that typically provide bullish or bearish conditions. One of the historical realities of the stock market is that it typically has performed poorest during the month of September. The Stock Trader's Almanac reports that, on average, September is the month when the stock market's three leading indexes usually perform the poorest. Some have dubbed this annual drop-off as the "September Effect." The September Effect is a market anomaly and not related to any particular market event or news. The September Effect is not limited to U.S. stocks, but is associated with most worldwide markets as well. A "down month" for the stock market means that, on the whole, the prices of stocks have declined from the previous month. Based on an analysis of market trends over the last 80 years the probability that September is a down month is 0.64. Furthermore, if September is an up month, the probability that October will be a down month is 0.33. However, if September is a down month, then the probability that October will be a down month is 0.56. Let S = September is a down month and O=October is a down month. Use this information to answer the following questions. (a) Are the events S and O independent? Why or why not? (Select all that apply.) P(O)=P(OS) Yes. P(O) = P(O(S) The probability that October is a down month does NOT change depending on whether September is a down month. The probability that October is a down month changes depending on whether September is a down month. No. (b) What is the probability that both September and October will be down months? (Round your answer to four decimal places) Complement P(Sno) Intersection Union Union P((SUO)) P(SO) P(sno) P(SUO) Disjoint P(SC) (c) What is the probability that September will be a down month, but October will not? (Round your answer to four decimal places) Identify the correct notation AND terminology for the probability you calculated immediately above. (Select any term that is applicable) (Select all that apply.) P(Sno Intersection P((SUO)) Union P(SC) P(SO) Disjoint Complement P(SNO) P(SUO) (d) What is the probability that either September or October or both will be a down month? (HINT: Did we give you enough information to use one of the formulas we discussed in class to compute this probability? If not, use the Tree Diagram approach.) (Round your answer to four decimal places) Identify the correct notation AND terminology for the probability you calculated immediately above. (Select any term that is applicable) (Select all that apply.) P(Sno) P(SO) P(SNO) Disjoint Union Complement P(SC) P(SUO) P((SUO) Intersection (e) What is the probability that neither September nor October will be a down month? (Round your answer to four decimal places) Identify the correct notation AND terminology for the probability you calculated immediately above. (Select any term that is applicable) (Select all that apply.) Complement Union P(SO) Disjoint P(SnoS) P(SUO) P(Sno) P((SUO)) Intersection P(SC)
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a The events S and O are not independent The probability that October is a down month changes depend... View the full answer
Related Book For
Financial Accounting Theory
ISBN: 9780134166681
8th Edition
Authors: William R. Scott, Patricia O'Brien
Posted Date:
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