Question
Large investment banks do massive amount of electronic trading based on some very sophisticated software they develop and use effectively. Individual investors do not have
Large investment banks do massive amount of electronic trading based on some very sophisticated software they develop and use effectively. Individual investors do not have the benefit of such dedicated specialized software and as such, when they do on-line trading, their success rate is about 30%. If an individual engages in on-line trading for 100 times, calculate: a. the expected value and standard deviation of the number of successful trades. b. the approximate probability that more than 36 trades will be successful. c. what conditions need to be satisfied and corrections to be used do the calculation in part "ii" above. d. Calculate the precise value of the probability by using MiniTab and an appropriate distribution. e. If % error is defined as (Approximate Value - Precise Value)/(Precise Value)* 100, calculate this % error and comment on your calculation based on approximate method. How good is your approximation?
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