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I'm not a native English speaker, and this assignment wasn't originally in English, so I had to translate it to English, thus the grammar errors, but hopefully it's understandable)

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For an investment in an equity assessed in general to be the following probabilities attached to the exact number of days in a row with positive returns

One day with a positive return , 2 day negative return 26.7%

2 consecutive days with positive returns , 3. day negative return……………. 13.1%

3 consecutive days with positive returns , 4. day negative return……………. 5.3%

4 consecutive days with positive returns , 5. day negative return …………….1.4%

5 consecutive days with positive returns , 6. day negative return …………….0.7%

6 or more consecutive days with positive returns …………………………………….0.0%

For example , there seem to be a probability of 26.7% on any given workday to achieve a positive return and then on the following day to achieve a negative return. Similarly, there seem to be a probability of 13.1% on any given workday to achieve a positive return and then on the following day also to achieve a positive return while on the third day to achieve a negative return.

a) Calculate by using the table above the probability of maximum n days in a row with positive daily returns by investing in its shares . The calculation must be made for n = 0, 1, 2, 3, 4, 5.

b) Calculate the mean, variance and standard deviation of the exact number of days in a row with a positive return on investment in its shares.

c) Calculate the probability to achieve a positive return n or more days in a row by investing in the share. The calculation must be made for n= 0, 1, 2, 3, 4, 5.

d) Calculate, with previously acquired results from c) the probability for a positive return on any given workday in the investment of shares GIVEN/granted that the share has had positive returns the previous n days. The calculation must be made for n= 1, 2, 3, 4.

E(X)=P(X

Var(X)=(X

I've been sitting with this assignment for hours, but just feel completely lost and have given up. To me it seems like they are, more or less, asking for the same thing in a) c) AND d), so yeah.. guess you can say probability isn't my strong side.

This is what I've done so far(though probably wrong):

P(0)=1-(P(1)+P(2)+P(3)+P(4)+P(5))

P(0)=1-(0,267+0,131+0,053+0,014+0,07)

P(0)=1-0,472

P(0)=0,528

n(0)=0,528

n(1)=1-P(0) =1-0,528=0,472

n(2)=1-P(0)+P(1) =1-0,795=0,205

n(3)=1-P(0)+P(1)+P(2) =1-0,926=0,074

n(4)=1-P(0)+P(1)+P(2)+P(3) =1-0,979=0,021

n(5)=1-P(0)+P(1)+P(2)+P(3)+P(4)=1-0,993=0,007

As I said before, I have no idea if what I've done can be used or even what question I've answered (or have not answered)

b)

E(X)=0,528*0+0,267*1+0,131*2+0,053*3+0,014*4+0,007*5+0*6=0,779

Var(X)=0,528*(0-0,779)

I'm not used to forums really, so I hope I've done this right. If not, just tell me, and I'll fix it.

Thanks in advance :)

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For an investment in an equity assessed in general to be the following probabilities attached to the exact number of days in a row with positive returns

One day with a positive return , 2 day negative return 26.7%

2 consecutive days with positive returns , 3. day negative return……………. 13.1%

3 consecutive days with positive returns , 4. day negative return……………. 5.3%

4 consecutive days with positive returns , 5. day negative return …………….1.4%

5 consecutive days with positive returns , 6. day negative return …………….0.7%

6 or more consecutive days with positive returns …………………………………….0.0%

For example , there seem to be a probability of 26.7% on any given workday to achieve a positive return and then on the following day to achieve a negative return. Similarly, there seem to be a probability of 13.1% on any given workday to achieve a positive return and then on the following day also to achieve a positive return while on the third day to achieve a negative return.

a) Calculate by using the table above the probability of maximum n days in a row with positive daily returns by investing in its shares . The calculation must be made for n = 0, 1, 2, 3, 4, 5.

b) Calculate the mean, variance and standard deviation of the exact number of days in a row with a positive return on investment in its shares.

c) Calculate the probability to achieve a positive return n or more days in a row by investing in the share. The calculation must be made for n= 0, 1, 2, 3, 4, 5.

d) Calculate, with previously acquired results from c) the probability for a positive return on any given workday in the investment of shares GIVEN/granted that the share has had positive returns the previous n days. The calculation must be made for n= 1, 2, 3, 4.

E(X)=P(X

_{i})*X_{i}Var(X)=(X

_{i}-E(X))^{2}I've been sitting with this assignment for hours, but just feel completely lost and have given up. To me it seems like they are, more or less, asking for the same thing in a) c) AND d), so yeah.. guess you can say probability isn't my strong side.

This is what I've done so far(though probably wrong):

P(0)=1-(P(1)+P(2)+P(3)+P(4)+P(5))

P(0)=1-(0,267+0,131+0,053+0,014+0,07)

P(0)=1-0,472

P(0)=0,528

n(0)=0,528

n(1)=1-P(0) =1-0,528=0,472

n(2)=1-P(0)+P(1) =1-0,795=0,205

n(3)=1-P(0)+P(1)+P(2) =1-0,926=0,074

n(4)=1-P(0)+P(1)+P(2)+P(3) =1-0,979=0,021

n(5)=1-P(0)+P(1)+P(2)+P(3)+P(4)=1-0,993=0,007

As I said before, I have no idea if what I've done can be used or even what question I've answered (or have not answered)

b)

E(X)=0,528*0+0,267*1+0,131*2+0,053*3+0,014*4+0,007*5+0*6=0,779

Var(X)=0,528*(0-0,779)

^{2}+0,267*(1-0,779)^{2}+0,131*(2-0,779)^{2}+0,053*(3-0,779)^{2}+0,014*(4-0,779)^{2}+0,007*(5-0,779)^{2}+0,0*(6-0,779)^{2}=1,060159I'm not used to forums really, so I hope I've done this right. If not, just tell me, and I'll fix it.

Thanks in advance :)

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