Certain stocks are recommended each month by a monthly magazine. If 40% of the stocks recommended advance at least 20%, what is the probability that of the five stocks most recently recommended, at least three will advance at least 20%? Please explain each step.
This is a question on binomial probability.
Proportion of successes = p = 40% = 40/100 = 0.40
Proportion of failures = q = 1 - p = 1 - 0.40 = 0.60
A clear step-by-step solution is provided.