Probability

CFA Level I Quant
#1

Hello,

Please help me with this question , I am confused with how to use probability for 18th day

A month contains 20 trading days. Which of the following is closest to the probability of the market rising on 18th day of the 20 days? The probability of a rise is 55%

Thanks

#2

55%.

#3

Hi Magician.

Thanks for the reply

The options are :-

  1. 0.000816032

  2. 0.001632063

  3. 0.004029786

#4

None of those answers applies to the question you wrote.

Perhaps you meant the probability of rising on 18 out of the 20 days (and falling the other two).

In that case, the answer’s:

20C18 × (0.55^18) × (0.45^2)

= 0.000816031717821556