Simplified stock market Suppose there are three kinds of days: GOOD, GREAT, and ROTTEN. The following table gives the frequency of each of these types of days and the effect on the price of a certain stock on that day. Type of Day | Frequencey | Change in value --------------------------------------------- GOOD | 60 % | +2 GREAT | 10 % | +5 ROTTEN | 30 % | -4 The type of a given day is independent of the type of any other day. Let X be the random variable giving the change in value of the stock after 1 day. a. What is the expected change in the stock price? (That is, find E(X)) b. Calculate Var(X). Note: Give your answer in decimal form, round to the nearest hundredths place Part(a) Find E(X) is wrong, please solve it again, the answer was wrong, it's not 0.50 Part(b) is correct, the Var(X) is 9.45
Simplified stock market
Suppose there are three kinds of days: GOOD, GREAT, and ROTTEN. The following table gives the frequency of each of these types of days and the effect on the price of a certain stock on that day.
Type of Day | Frequencey | Change in value
---------------------------------------------
GOOD | 60 % | +2
GREAT | 10 % | +5
ROTTEN | 30 % | -4
The type of a given day is independent of the type of any other day. Let X be the random variable giving the change in value of the stock after 1 day.
a. What is the expected change in the stock price? (That is, find E(X))
b. Calculate Var(X).
Note: Give your answer in decimal form, round to the nearest hundredths place
Part(a) Find E(X) is wrong, please solve it again, the answer was wrong, it's not 0.50
Part(b) is correct, the Var(X) is 9.45
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