Using this information and a bionomial distribution, what is the probability that the stock market will rise:
From 1872 to 2000, the stock market rose 74% of the years. Using this...
Between 1896 when the Dow Jones Index was created and 2009, the index rose in 64% of the years. Sample size is 5 years. Based on this information and assuming a binomial distribution, answer the following questions Build the probability distribution Build the cumulative distribution Graph the probability and cumulative distribution Find the probability the stock market will rise one year in the next five years? Find the probability the stock market will rise in three years of the next...
A believer in the “random walk” theory of stock markets thinks the value of an index of stock prices has a 0.65 probability of rising in any year. The change in the value of the index in any given year is not affected by whether it rose or fell in earlier years. You plan to record the value for the index in each of the next eight years. Let the random variable, X, represent the number of years (out of...
Rose bought a piece of land 3 years ago for $1. Today the fair market value of the land is $100 and she transfers it to Flower Inc in exchange for all 100 shares of Flower’s voting common stock worth $100. There are no other shareholders Does Rose recognize gain on the transfer? NO What is Rose’s basis in the stock? $1 What is Rose’s holding period in the stock? 3 years What is Flower’s basis in the land? $1...
4. Over the last 10 years, a company's annual earnings increased year over year seven times and decreased year over year three times. You decide to model the number of earnings increases for the next decade as a binomial random variable. A. What is your estimate of the probability of success, defined as an increase in annual earnings? For Parts B, C, and D of this problem, assume the estimated probability is the actual probability for the next decade. B....
You build a binomial model with one period and assert that over the course of a year the stock price will either rise by a factor of 1.5 or fall by a factor of ⅔. What is your implicit assumption about the volatility of the stock's rate of return over the next year? please SHOW working out
Find the indicated probabilities using the geometric distribution, the Poisson distribution, or the binomial distribution. Then determine if the events are unusual. If convenient, use the appropriate probability table or technology to find the probabilities. The mean number of births per minute in a country in a recent year was about three. Find the probability that the number of births in any given minute is (a) exactly five, (b) at least five, and (c) more than five. (a) P(exactly five)-...
5. Rose bought a piece of land 3 years ago for $33. Today the fair market value is $100 and she transfers it to Flower Inc in exchange for all 100 shares of Flower's voting common stock worth $100. There are no other shareholders. a. Does Rose recognize gain on the transfer, show the calculation of gain or loss realized and gain or loss recognized labeled the way we do it in class. b. What is Rose's basis in the...
Find the indicated probabilities using the geometric distribution, the Poisson distribution, or the binomial distribution. Then determine if the events are unusual. If convenient, use the appropriate probability table or technology to find the probabilities. The mean number of births per minute in a country in a recent year was about seven. Find the probability that the number of births in any given minute is (a) exactly five, (b) at least five, and (c) more than five. (a) P(exactly five)...
The market price of a stock is $30.30 and it is expected to pay a $2.38 dividend next year. The dividend is expected to grow at 2.36% forever. What is the required rate of return for the stock? Answer format: Percentage Round to: 0 decimal places (Example: 9%, % sign required. Will accept decimal format rounded to 2 decimal places (ex: 0.09)) Caspian Sea Drinks is considering buying the J-Mix 2000. It will allow them to make and sell more...
4. A company tells you that their light bulbs last two years on average, with an exponential distribution. a. If they are correct, what is the probability that the light bulb will last between three and four years? b. What is the probability that the light bulb will last one year or less? c. If the light bulb lasts eight years, should you be surprised? (Is the probability of this event less than five percent?) Does it seem like the...