A simplified model of the movement of the price of a stock supposes that on each day the stock’s price either moves up 1 unit with probability 0.9 or moves down 1 unit with probability 0.1. The changes on different days are assumed to be independent. a) What is the probability that after four days the stock will be at its original price? b) What is the probability that after five days the stock’s price will have decreased by 1 unit? c) Given that the stock is at its original price after two days, what is the probability it will be below its original price after five days?

A simplified model of the movement of the price of a stock supposes that on each day the stock’s price either moves up 1 unit with probability 0.9 or moves down 1 unit with probability 0.1. The changes on different days are assumed to be independent. a) What is the probability that after four days the stock will be at its original price? b) What is the probability that after five days the stock’s price will have decreased by 1 unit? c) Given that the stock is at its original price after two days, what is the probability it will be below its original price after five days?

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A First Course in Probability (10th Edition)

10th Edition

ISBN:9780134753119

Author:Sheldon Ross

Publisher:Sheldon Ross

Chapter1: Combinatorial Analysis

Section: Chapter Questions

Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...

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Concept explainers

Contingency Table

A contingency table can be defined as the visual representation of the relationship between two or more categorical variables that can be evaluated and registered. It is a categorical version of the scatterplot, which is used to investigate the linear relationship between two variables. A contingency table is indeed a type of frequency distribution table that displays two variables at the same time.

Binomial Distribution

Binomial is an algebraic expression of the sum or the difference of two terms. Before knowing about binomial distribution, we must know about the binomial theorem.

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Urgentt!! A simplified model of the movement of the price of a stock supposes that on each day the stock’s price either moves up 1 unit with probability 0.9 or moves down 1 unit with probability 0.1. The changes on different days are assumed to be independent.

a) What is the probability that after four days the stock will be at its original price?

b) What is the probability that after five days the stock’s price will have decreased by 1 unit?

c) Given that the stock is at its original price after two days, what is the probability it will be below its original price after five days?

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