Question
Since the stock market began in 1872, stock prices have risen in about 72% of the years. Assuming that market performance is independent from year
Since the stock market began in 1872, stock prices have risen in about 72% of the years. Assuming that market performance is independent from year to year, what's the probability that
c) the market will fall during at least 1 of the next 5 years?
d) the market will rise during a majority of years over the next decade?
e) Of course, in reality the movement of the stock market my not be independent from year to year,Many investment advisors argue that after stocks have declined in value for 2 consecutive years, people should invest heavily because the market rarely declines 3 years in a row. Since the stock market began in 1872, there have been two consecutive losing years nine times. In six of those cases, the market rose during the following year. Overall, stocks have risen in value during 106 of the 147 years since the market began in 1872. Do you think these investment advisors are giving good advice?
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