Concept explainers
Day Trading Day traders typically buy and sell stocks (or other investment instruments) during the trading day and sell all investments by the end of the day. Exercises 63 and 64 are based on the following table, which shows the closing prices on September 22, 2015, of 12 stocks selected by your broker, Prudence Swift, as well as the change that day.22
Tech Stocks | Close | Change |
AAPL (Apple) | $113.40 | –1.81 |
ADBE (Adobe Systems) | $84.66 | 1.34 |
EBAY (eBay) | $25.61 | –0.31 |
MSFT (Microsoft) | $3.90 | –0.21 |
S (Sprint) | $4.40 | 0.02 |
WIFI (Boingo Wireless) | $8.51 | 0.56 |
Non-Tech Stocks | ||
ANF (Abercrombie & Fitch | $21.81 | –0.02 |
B (Boeing) | $133.99 | –2.03 |
F (Ford Motor Co.) | $13.91 | –0.40 |
GE (General Electric) | $25.10 | 0.01 |
GIS (General Mills) | $57.12 | 0.33 |
JNJ (Johnson & Johnson) | $93.26 | 0.13 |
On the morning of September 22, 2015, Swift advised your friend to purchase a collection of three stocks chosen at random from those listed in the table. Your friend was to sell all the stocks at the end of the trading day.
a. How many possible collections are possible?
b. How many of the collections in part (a) included exactly two tech stocks that increased in value by the end of the day?
c. Using the answers to parts (a) and (b), what would you say the chances were that your friend chose a collection that included exactly two tech stocks that increased in value by the end of the day?
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