A simplified model for the movement of the priceof a stock
Chapter 3, Problem 3.57(choose chapter or problem)
A simplified model for the movement of the priceof a stock supposes that on each day the stocksprice either moves up 1 unit with probability p ormoves down 1 unit with probability 1 p. Thechanges on different days are assumed to be independent.(a) What is the probability that after 2 days thestock will be at its original price?(b) What is the probability that after 3 days thestocks price will have increased by 1 unit?(c) Given that after 3 days the stocks price hasincreased by 1 unit, what is the probabilitythat it went up on the first day?
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