- CFA Exams
- CFA Level I Exam
- Topic 1. Quantitative Methods
- Learning Module 4. Common Probability Distributions
- Subject 4. Discrete and Continuous Uniform Distribution

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**CFA Practice Question**

Recent history has shown that movements of more than 3% in the Dow Jones Industrial Average occur in 2% of the trading days. What is the probability that within the next 30 trading days there will be one or more days in which the average will move more than 3%?

A. 0.4545

B. 0.0836

C. 0.2876

**Explanation:**1 - 0.98

^{30}= 0.4545

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**User Contributed Comments**
4

User |
Comment |
---|---|

tabulator |
We deduct from 1 the probability that there will be no 3% movement in the Dow. Thus we obtain the probability that there will be a movement at one or more days. The probability is obtained from the binomial probability formula. |

chamad |
Can some one explain! |

StanleyMo |
hello chamad, you can consider this: P(0)= 30C0 (0.02)^0 (0.98)^30 = 0.54548 = probability (0 days trading less than 3%) to get 1 or more days, you minus 1 - P (0) |

gaetmichel |
thx |