Many people believe that the daily change in price of a company's stock in the stock market is a random variable with mean 0 and variance o² during the middle 2 months between 2 earning report dates when there is not much news released. That is, if Yn represents the closing price of the stock on the nth trading day of that period, then Yn = Yn-1 + Xn, for 1 ≤ n ≤ 60, where X₁, X2,..., X60 are independent and identically distributed random variables with mean 0 and variance o². Suppose that the stock price at the beginning of the 2-month period is 100. If σ = 2, what is the approximate probability that the stock's closing price on the 30th trading day will exceed 110, i.e., what is P(Y30 > 110)
Many people believe that the daily change in price of a company's stock in the stock market is a random variable with mean 0 and variance o² during the middle 2 months between 2 earning report dates when there is not much news released. That is, if Yn represents the closing price of the stock on the nth trading day of that period, then Yn = Yn-1 + Xn, for 1 ≤ n ≤ 60, where X₁, X2,..., X60 are independent and identically distributed random variables with mean 0 and variance o². Suppose that the stock price at the beginning of the 2-month period is 100. If σ = 2, what is the approximate probability that the stock's closing price on the 30th trading day will exceed 110, i.e., what is P(Y30 > 110)
Algebra & Trigonometry with Analytic Geometry
13th Edition
ISBN:9781133382119
Author:Swokowski
Publisher:Swokowski
Chapter10: Sequences, Series, And Probability
Section10.8: Probability
Problem 32E
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![Many people believe that the daily change in price of a company's stock in the stock market is a random variable
with mean 0 and variance o² during the middle 2 months between 2 earning report dates when there is not much
news released. That is, if Yn represents the closing price of the stock on the nth trading day of that period, then
Yn = Yn-1+Xn, for 1 ≤ n ≤ 60, where X₁, X2,..., X60 are independent and identically distributed random variables
with mean 0 and variance o². Suppose that the stock price at the beginning of the 2-month period is 100. If o = 2,
what is the approximate probability that the stock's closing price on the 30th trading day will exceed 110, i.e., what
is P(Y30 > 110)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1941a39f-dbc9-477a-8528-f1bffe3dd4bc%2Fb641e74a-f4d0-414b-8023-ac3703b978f7%2Fv852kde_processed.png&w=3840&q=75)
Transcribed Image Text:Many people believe that the daily change in price of a company's stock in the stock market is a random variable
with mean 0 and variance o² during the middle 2 months between 2 earning report dates when there is not much
news released. That is, if Yn represents the closing price of the stock on the nth trading day of that period, then
Yn = Yn-1+Xn, for 1 ≤ n ≤ 60, where X₁, X2,..., X60 are independent and identically distributed random variables
with mean 0 and variance o². Suppose that the stock price at the beginning of the 2-month period is 100. If o = 2,
what is the approximate probability that the stock's closing price on the 30th trading day will exceed 110, i.e., what
is P(Y30 > 110)
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