An investment analyst is following the stock of High Flyer Company. She believes that in any month,
Question:
An investment analyst is following the stock of High Flyer Company. She believes that in any month, the stock has a 65 % chance of going up and a 35 %
chance of going down. Using the binomial distribution, compute the probability that the stock goes up in 18 or more months during a 36-month period. Now use the normal approximation to the binomial distribution to recompute your answer. Compare the two results. Which method was easier to use?
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Step by Step Answer:
Lets start with using the binomial distribution The binomial distribution formula is given as Px Cnx px 1pnx Where Px the probability of x successes i...View the full answer
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Related Book For 
Statistics For Business And Financial Economics
ISBN: 9781461458975
3rd Edition
Authors: Cheng Few Lee , John C Lee , Alice C Lee
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