Question

The probability of the stock market going up in a single day is 51%. What is the probability that the market will go up 4 consecutive days?

Answer 1

`Probability = 0.068`

Explanation:

Let P(S) represent the probability that stock market will go up in a day

Given

`P(S) = 51\%`

Required

Determine the probability that stock will go up 4 consecutive days

Start by converting P(S) from percentage to decimal

`P(S) = 51\%`

`P(S) = (51)/(100)`

`P(S) = 0.51`

The above expression represents the probability in a day;

For 4 days; we have:

`Probability = P(S) * P(S) * P(S) * P(S)`

`Probability = (P(S))^4`

Substitute 0.51 for P(S)

`Probability = (0.51)^4`

`Probability = 0.06765201`

`Probability = 0.068` -- Approximated

Hence, the probability that stock will rise for 4 consecutive days is 0.068