The increase or decrease in the price of a stock between the

The increase or decrease in the price of a stock between the beginning and the end of a trading day is assumed to be an equally likely random event. What is the probability that a stock will show an increase in its closing price on five consecutive days?

The probability that a stock will show an increase in its closing price on five consecutive days is_______

The probability that a stock will show an increase in its closing price on five consecutive days is________

Solution

this is the binomial distribution.

(p**k)*(1-p)**(n-k) where n = 5 number of days and k= number of up ticks. p= probability of each up tick ie 0.5

0.03125 * 1 = 0.03125