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Question 5:Probability

By April 5, 2022No Comments

Question 5:ProbabilityAssume that two stocks in your sample have a 35%and 45%chance of rising on a given day,let’s saystocks A and B respectively.Calculate the followingi.The probability of both stocks rising on the given day (assume independence)(4 marks)ii.The probability of either stock rising on the given day (assume a 30 chance that bothmay rise together)(4 marks)ii.The probability that stock A has risen given that stock B has risen on the given day (30%chance that the stocks may rise together)(4 marks)iv.In a real stock market setting,describe how you might estimate the above probabilities.Highlight limitations of your suggested approach (300 words max).(8 marks)



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