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Sample Statistics Paper On Statistical Stock Analysis

Homework Question on Statistical Stock Analysis

  • Assume the financing gurus of a weekend investment television program predicted a 50% chance of XYZ stock gaining in January and a 50% chance of gaining in February. Your financial advisor sees this and tells you there is a 100% chance XYZ stock will gain over the 2-month period.
  • Would you continue to use this financial advisor? Explain.

Homework Answer on Statistical Stock Analysis

I would not retain the services of a financial advisor who informs me that there is a 100% chance XYZ stock will gain over the 2-month period despite being predicted to increase by 50% for both January and February. This is he is incompetent or unfaithful as there is only a 75% likelihood of the stock gaining within the two months as determined below.

Let p (J) be probability of stock gaining in January; P (J’) be probability of stock not gaining in January, P (F) be probability of stock gaining in February, P (F’)be probability of stock gaining in February.

P (G) be probability of stock gaining within the two months.

Homework Help

There are four possible outcomes:

  1. Stock gains in both months i.e.
  2. Stock gains in January doesn’t in February i.e. .
  3. Stock gains in February doesn’t in January i.e.  .
  4. Stock doesn’t gains in both months i.e.