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 Frequency Change in stock value GOOD 60% 10% +2 +5 GREAT -4 ROTTEN 30% 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. Please answer: a. What is the expected change in the stock price? (That is, find E(X).) b. Calculate Var(X). NOTE: Give your answer to two decimal places (i.e., round to the nearest hundredths)
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 Frequency Change in stock value GOOD 60% 10% +2 +5 GREAT -4 ROTTEN 30% 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. Please answer: a. What is the expected change in the stock price? (That is, find E(X).) b. Calculate Var(X). NOTE: Give your answer to two decimal places (i.e., round to the nearest hundredths)
Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
Chapter2: Second-order Linear Odes
Section: Chapter Questions
Problem 1RQ
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Transcribed Image Text: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 Frequency Change in stock value
GOOD
60%
10%
+2
+5
GREAT
-4
ROTTEN
30%
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. Please answer:
a. What is the expected change in the stock price? (That is, find E(X).)
b. Calculate Var(X).
NOTE: Give your answer to two decimal places (i.e., round to the nearest hundredths)
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