The probability that one stock index rises on any given day is 45%. The probability that...

The probability that one stock index rises on any given day is 45%. The probability that another stock index rises is 52%. It can be assumed that the activities of one index are not affected by the other. What is the probability both stock indexes rise on the same day?

Solutions

Expert Solution

Probability that one stock index rises on any given day = 0.45 ( We converted 45 % in to decimal )

Probability that another stock index rises = 0.52 ( We converted 52 % in to decimal )

We have to find

Probability both stock indexes rise on the same day

We have given

It can be assumed that the activities of one index are not affected by the other.

That means Stock index one and Stock index two are independent of each other.

We use formula for independence

P (A and B ) = P (A) * P ( B )

Probability both stock indexes rise on the same day = Probability that one stock index rises on any given day * Probability that one stock index rises on any given day

Probability both stock indexes rise on the same day = 0.45 * 0.52

Probability both stock indexes rise on the same day = 0.234

We convert the probability in to percentage

Probability both stock indexes rise on the same day =23.4 %

Final answer :-

Probability both stock indexes rise on the same day = 0.234

Probability both stock indexes rise on the same day =23.4 %

orchestra answered 1 year ago

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