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Suppose you receive an e-mail from a stock broker who claims to be able to accur

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Suppose
you receive an e-mail from a stock broker who claims to be able to
accurately predict whether any given stock will rise or fall in price
during the subsequent month. To “prove” her claim, she makes a
prediction about performance (higher price or lower price) for ten
stocks over the next month. You are skeptical of the broker’s claim, and
assume she simply guesses which stocks will improve or worsen in price
over any given month. Put another way, you assume she has a 50% chance
of being correct in her prediction for any given stock. Based on this
assumption, you derive the following probabilities concerning her ten
picks: Number of correct picks
0
1
2
3
4
5
6
7
8
9
10
Probability
0.001
0.01
0.044
0.117
0.205
0.246
0.205
0.117
0.044
0.01
0.001
What is the empirically testable conclusion resulting from your deductive reasoning?
How could you test your empirically testable conclusion using a data sample?
Outline
the inductive and deductive reasoning you could use to evaluate whether
or not the broker is simply guessing in her stock picks.
Requirements: .doc file

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