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A believer in the random walk theory of stock markets thinks the value of an index of stock prices has a 0.625 (= 5/8) probability
A believer in the "random walk" theory of stock markets thinks the value of an index of stock prices has a 0.625 (= 5/8) 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 the next eight years) in which the value of the index rises. a. Calculate the probability that X = 6 0.2112 0.2816 Correct answer is 0.2347 0.0467 Explain how to get that answer using formulas, be brief and clear
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