Question

An investment analyst found that a certain stcok price goes up or down a point every day with probabilities 0.75 and 0.25, respectively. Daily flucturations are independent. Fidn the expected value and the variance of the first day when the stock price goes up? What is the MGF of this day? What is the probability that this day happens on the sixth day?

Answer 1

Soluion' Given daļā Every dag probabili ties P=0,15 E(x) = By substituting p, Valua in E(X) equation then we ger ECX) 33 33 -Haa, oe have b calculati he \lanance р" (0-15) O&S Vay iance (Un(x)) 0,75 e The Valu mGF(x) - I- o 2set Hese, use have to=4'nd- probability, on si-doi- 6