Maurice Tutor

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Teaching Since: May 2017
Last Sign in: 409 Weeks Ago, 1 Day Ago
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  • MCS,PHD
    Argosy University/ Phoniex University/
    Nov-2005 - Oct-2011

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    Phoniex University
    Oct-2001 - Nov-2016

Category > Management Posted 22 Nov 2017 My Price 4.00

Buying stock

Buying stock (5.3, 6.1) You purchase a hot stock for $1000. The stock either gains 30% or loses 25% each day, each with probability 0.5. Its returns on consecutive days are independent of each other. You plan to sell the stock after two days.

 

(a) What are the possible values of the stock after two days, and what is the probability for each value? What is the probability that the stock is worth more after two days than the $1000 you paid for it?

(b) What is the mean value of the stock after two days? (Comment: You see that these two criteria give different answers to the question “Should I invest?”)

Answers

(5)
Status NEW Posted 22 Nov 2017 02:11 PM My Price 4.00

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