Profits at a securities firm are determined by the volume of securities sold, and this volumefluctuates from week to week. If volume is high this week, then next week it will be high with aprobability of 0.7 and low with a probability of 0.3. If volume is low this week then it will be highnext week with a probability of 0.2.1. Find the transition matrix for the Markov chain, with high volume being state 1 and lowvolume state 2.......2. If the volume was low last week, what is the probability the volume will be low this week?3. If the volume was high this week, what is the probability it will be low three weeks fromnow?4. If the volume was high this week, what is the probability it will be alternate between lowand high for the next three weeks (i.e. High → Low→ HighLow.)

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Description: Profits at a securities firm are determined by the volume of securities sold, and this volumefluctuates from week to week. If volume is high this week, then next week it will be high with aprobability of 0.7 and low with a probability of 0.3. If vol

1.Given, If the volume of securities sold is high this week, then the probability that it will be…

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Profits at a securities firm are determined by the volume of securities sold, and this volume fluctuates from week to week. If volume is high this week, then next week it will be high with a probability of 0.7 and low with a probability of 0.3. If volume is low this week then it will be high next week with a probability of 0.2.

Profits at a securities firm are determined by the volume of securities sold, and this volume fluctuates from week to week. If volume is high this week, then next week it will be high with a probability of 0.7 and low with a probability of 0.3. If volume is low this week then it will be high next week with a probability of 0.2.

Linear Algebra: A Modern Introduction

4th Edition

ISBN:9781285463247

Author:David Poole

Publisher:David Poole

Chapter3: Matrices

Section3.7: Applications

Problem 12EQ: 12. Robots have been programmed to traverse the maze shown in Figure 3.28 and at each junction...

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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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Question

Profits at a securities firm are determined by the volume of securities sold, and this volume
fluctuates from week to week. If volume is high this week, then next week it will be high with a
probability of 0.7 and low with a probability of 0.3. If volume is low this week then it will be high
next week with a probability of 0.2.
1. Find the transition matrix for the Markov chain, with high volume being state 1 and low
volume state 2.
...
...
2. If the volume was low last week, what is the probability the volume will be low this week?
3. If the volume was high this week, what is the probability it will be low three weeks from
now?
4. If the volume was high this week, what is the probability it will be alternate between low
and high for the next three weeks (i.e. High → Low
→ High
Low.)

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Profits at a securities firm are determined by the volume of securities sold, and this volume fluctuates from week to week. If volume is high this week, then next week it will be high with a probability of 0.7 and low with a probability of 0.3. If volume is low this week then it will be high next week with a probability of 0.1. 1. Find the transition matrix for the Markov chain, with high volume being state 1 and low volume state 2. ... ... ... ... 2. If the volume was low last week, what is the probability the volume will be low this week? ... ... ... 3. If the volume was high this week, what is the probability it will be low three weeks from now? ...
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