It has been a bad day for the stock market with 60% of securities losing value. You are evaluating a portfolio of 10 securities and will assume a binomial distribution for the number of securities...

It has been a bad day for the stock market with 60% of securities losing value. You are evaluating a portfolio of 10 securities and will assume a binomial distribution for the number of securities that lost value.

1. What assumption do you need to make when you use a binomial distribution?


2. How many securities in your portfolio would you expect to lose value?