Exchange of Companies Listed Probability of Stock Advancing

Exchange

% of Companies Listed

Probability of Stock Advancing

Probability of Stock Declining

Probability the Stocks Remains Unchanged

NYSE

54.7%

.692

.267

.041

NASDAQ

45.3%

.657

.297

.046

Find the probability of a the following event.

- A declining stock was listed on the NASDAQ.

Solution

P(decline stock) = P(NYSE and decline)+P(NASDAQ and decline) = (0.547* 0.267)+(0.453 * 0.297) = 0.28059

Probability a declinining stock was listed on the NASDAQ = P(NASDAQ and decline)/P(decline stock)

= (0.453 * 0.297)/ 0.28059 = 0.479493