A financial analyst believes that if interest rates decrease in a given period, then the probability that the stock market will go up is 0.80. The analyst further believes that interest rates have a 0.40 chance of decreasing during the period in question. Given the above information, what is the probability that the market will go up and interest rates will go down during the period in question?
Contingency Table
A contingency table can be defined as the visual representation of the relationship between two or more categorical variables that can be evaluated and registered. It is a categorical version of the scatterplot, which is used to investigate the linear relationship between two variables. A contingency table is indeed a type of frequency distribution table that displays two variables at the same time.
Binomial Distribution
Binomial is an algebraic expression of the sum or the difference of two terms. Before knowing about binomial distribution, we must know about the binomial theorem.
A financial analyst believes that if interest rates decrease in a given period,
then the probability that the stock market will go up is 0.80. The analyst further
believes that interest rates have a 0.40 chance of decreasing during the period in
question. Given the above information, what is the probability that the market will go
up and interest rates will go down during the period in question?
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