Answer:
[tex]Probability = 0.068[/tex]
Step-by-step explanation:
Let P(S) represent the probability that stock market will go up in a day
Given
[tex]P(S) = 51\%[/tex]
Required
Determine the probability that stock will go up 4 consecutive days
Start by converting P(S) from percentage to decimal
[tex]P(S) = 51\%[/tex]
[tex]P(S) = \frac{51}{100}[/tex]
[tex]P(S) = 0.51[/tex]
The above expression represents the probability in a day;
For 4 days; we have:
[tex]Probability = P(S) * P(S) * P(S) * P(S)[/tex]
[tex]Probability = (P(S))^4[/tex]
Substitute 0.51 for P(S)
[tex]Probability = (0.51)^4[/tex]
[tex]Probability = 0.06765201[/tex]
[tex]Probability = 0.068[/tex] -- Approximated
Hence, the probability that stock will rise for 4 consecutive days is 0.068
