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Mathematics, 07.04.2020 18:59 cassidy100117

The "Super Bowl indicator" of stock market performance, as measured by the Dow Jones Industrial average, goes as follows: When the winner of the Super Bowl is one of the original NFL teams, the Dow Jones Industrial average during the rest of the year goes up. When the winner of the Super Bowl is one of the original AFL teams, the Dow Jones Industrial average during the rest of the year goes down. Investors began paying attention to the Super Bowl indicator in 1978. Up to that time, 11 Super Bowls had been played, and in all 11 years, whenever an old NFL team won the Super Bowl in January, the Dow Jones Industrial average rose during the next 11 months, and whenever an old AFL team won, the Dow Jones Industrial average dropped during the next 11 months. The Super Bowl results and stock market performance through 2012 (the first 46 Super Bowls) show that by simple random chance the "Super Bowl indicator" of stock market performance would be correct 59.5% of the time. However, in 35 of the 46 Super Bowls through 2012, the Super Bowl indicator has correctly predicted the direction of the Dow Jones Industrial average. To determine if this is evidence that the Super Bowl indicator is better than simple random chance, perform the hypothesis test H0: p = 0.595 Ha: p > 0.595, where p is the probability that the Super Bowl indicator correctly predicts the performance of the Dow Jones Industrial average.

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