Portfolio value moves in the same direction


The "random walk" theory of prices of securities states that price movements in disjoint time periods are independent of each other. Suppose that we recorded only whether a portfolio goes up or down each year, and that the probability that a portfolio goes up in any one year is 0.24.

What is the probability that the portfolio's value moves in the same direction in both of the next 2 years (i.e., two ups or two downs)? [Round your answer to 4 decimal places as needed.]

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Basic Statistics: Portfolio value moves in the same direction
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