Question

6. The probability that a stock increases in value on a Monday is 60%. When the

stock increases in value on Monday, the probability that the stock increases in
value on Tuesday is 80%. What is the probability that the stock increases in
value on both Monday and Tuesday of a given week? Show your work

Answer 1

the probability that the stock increases in value on both Monday and Tuesday is 0.48 or 48%.

Explanation:

We can use the conditional probability formula to solve this problem. Let A be the event that the stock increases in value on Monday, and B be the event that the stock increases in value on Tuesday. Then we want to find P(A and B), the probability that both events occur.

We know that P(A) = 0.6, the probability that the stock increases in value on Monday, and P(B|A) = 0.8, the probability that the stock increases in value on Tuesday given that it increased in value on Monday.

Using the formula for conditional probability, we have:

P(A and B) = P(B|A) * P(A)

Plugging in the given values, we get:

P(A and B) = 0.8 * 0.6

P(A and B) = 0.48

Therefore, the probability that the stock increases in value on both Monday and Tuesday is 0.48 or 48%.