2. The price of a stock on each day either moves up $1 with probability 0.4 or moves down $1 with probability 0.6. The changes on different days are assumed to be independent. (a) What is the probability that after two days the stock will be at its original price? (b) What is the probability that after 3 days the stock's price will have increased by 1 unit? (c) Given that after 3 days the stock's price has increased by 1 unit, what is the probability that it went up on the first day?
2. The price of a stock on each day either moves up $1 with probability 0.4 or moves down $1 with probability 0.6. The changes on different days are assumed to be independent. (a) What is the probability that after two days the stock will be at its original price? (b) What is the probability that after 3 days the stock's price will have increased by 1 unit? (c) Given that after 3 days the stock's price has increased by 1 unit, what is the probability that it went up on the first day?
Chapter8: Sequences, Series,and Probability
Section8.7: Probability
Problem 11ECP: A manufacturer has determined that a machine averages one faulty unit for every 500 it produces....
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