Question: What should we conclude about the Super Bowl Indicator described in the Case Study at the beginning of this chapter? To evaluate the Super Bowl Indicator, answer the following questions.
1. Stocks went down only 10 times in the 41 years between 1967 and 2007. If you simply predicted "up" every year, how would you have performed?
2. There are 19 original NFL and NFC teams and only 13 AFC teams. How often would you expect "NFL wins" to occur if one assumes that the chance of winning is proportional to the number of teams? How does this compare with simply predicting "up" every year?
3. Write a paragraph, in language that someone who knows no statistics would understand, explaining why the association between the Super Bowl Indicator and stock prices is not surprising and why it would be incorrect to conclude that the Super Bowl outcome causes changes in stock prices.