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Suppose that in any given time period a certain stock is equally likely to go up 11 unit or down 1 unit, and that the outcomes of different periods are independent. Let X₁ be the amount the stock goes up (either 1 or -1) in the first time period, and let Y be the cumulative amount it goes up in the first three periods. Find the correlation between X₁ and Y. (Hint: Let X, be the amount the stock goes up in the i-th time period so Y = X₁ + X₂ + X3.)

Suppose that in any given time period a certain stock is equally likely to go up 11 unit or down 1 unit, and that the outcomes of different periods are independent. Let X₁ be the amount the stock goes up (either 1 or -1) in the first time period, and let Y be the cumulative amount it goes up in the first three periods. Find the correlation between X₁ and Y. (Hint: Let X, be the amount the stock goes up in the i-th time period so Y = X₁ + X₂ + X3.)

MATLAB: An Introduction with Applications
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
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1. Suppose that in any given time period - a certain stock is equally likely to go up 1 unit or down 1 unit, and that the outcomes of different periods are independent. Let X₁ be the amount the stock goes up (either 1 or -1) in the first time period, and let Y be the cumulative amount it goes up in the first three periods. Find the correlation between X₁ and Y. (Hint: Let X, be the amount the stock goes up in the i-th time period so Y = X₁ + X₂ + X3.)
Transcribed Image Text:1. Suppose that in any given time period - a certain stock is equally likely to go up 1 unit or down 1 unit, and that the outcomes of different periods are independent. Let X₁ be the amount the stock goes up (either 1 or -1) in the first time period, and let Y be the cumulative amount it goes up in the first three periods. Find the correlation between X₁ and Y. (Hint: Let X, be the amount the stock goes up in the i-th time period so Y = X₁ + X₂ + X3.)
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