Question
Suppose you have historical data that says the probability a stock experiences a large price movement of more than 3% on a random day is
Suppose you have historical data that says the probability a stock experiences a large price movement of more than 3% on a random day is 0.4. Also, price movements (regardless of whether they are large or not) are negative 60% of the time. If you select 10 daily stock price movements completely at random, what is the probability that at least 5 of them are large or the first price movement you find is negative? Assume one stock's price movement has no effect on the price movement of any other stock and that the size of a price movement is independent of whether it is negative. Please provide your answer to the nearest 0.1%.
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