Simplified stock market. Suppose there are three kinds of days: GOOD, GREAT, and ROTTEN
Chapter 0, Problem 16(choose chapter or problem)
Simplified stock market. Suppose there are three kinds of days: GOOD, GREAT, and ROTTEN. The following chart 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% C2 GREAT 10% C5 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 five consecutive days. Please answer: a. What is the expected change in the stock price? (That is, find E.X /.) b. Calculate Var.X /.
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