A stock market analyst claims expertise in picking stocks that will outperform the corre- sponding industry norms.
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A stock market analyst claims expertise in picking stocks that will outperform the corre- sponding industry norms. This analyst is presented with a list of five high-technology stocks and a list of five airline stocks, and she is invited to nominate, in order, the three stocks that will do best on each of these two lists over the next year. The analyst claims that success in just one of these two tasks would be a substantial accomplishment. If, in fact, the choices were made randomly and independently, what would be the probability of success in at least one of the two tasks merely by chance? Given this result, what do you think of the analyst's claim?
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