Explain why the stochastic process

Assignment Help Basic Statistics

Reference no: EM131130901

Let {N₁(t),t ≥ 0} and {N₂(t),t ≥ 0} be two independent Poisson processes, with rates λ₁ and λ₂, respectively. We defineN(t) = N₁(t) - N₂(t).

(a) Explain why the stochastic process {N(t) t ≥ 0} is not a Poisson process.

(b) Give a formula for the probability P[N(t₂) - N(t₁) = n], for t₂ > t₁ ≥ 0 and n ∈ { 0 , ± 1 , ± 2 , . . . }.

Reference no: EM131130901

Questions Cloud

Describe how temperature data are gathered and used : Describe how the Earth's atmosphere absorbs and reflects incoming solar radiation and maintains Earth's energy balance, and describe the vertical and horizontal structures of the Earth's atmosphere.

Developmental diagnostic essay : Explain both your short term (semester) and long term goals (career) as they apply to your work here at Lone Star.

Discuss the issue of social dumping in terms of the eu : Dowling et al (p. 252) briefly discuss the issue of social 'dumping' in terms of the EU. How can this be considered comparable to the issue of outsourcing in the US? What suggestions do you have for these types of challenges?

Do you believe supreme court members should be term limited : Do you believe Supreme Court members should be term-limited?- Review and utilize the web pages at Find Law and Legal Affairs to make your argument.

Explain why the stochastic process : Let {N1(t),t ≥ 0} and {N2(t),t ≥ 0} be two independent Poisson processes, with rates λ1 and λ2, respectively. We defineN(t) = N1(t) - N2(t). (a) Explain why the stochastic process {N(t) t ≥ 0} is not a Poisson process.

Using expectations theory-forecast the yields on securities : The yield on 1-year Treasury securities is 6%, 2-year securities yield 6.2%, and 3-year securities yield 6.3%, and 4-year securities yield 6.5%.There is no maturity risk premium. Using expectations theory, forecast the yields on the following securit..

What are the real after-tax costs of funds to the business : what are the real after-tax costs of funds to the business? Similarly, if an investor receives a nominal return of 8 percent on a savings deposit, the tax rate is 30 percent, and the inflation rate is 6 percent, what is the after-tax rate of retur..

Explain the term zero sum game in derivative transaction : Explain the term 'zero sum game' in a derivative transaction. Discuss the main difference between Treynor's position of investment risk measurement and that of Sharpe and use your answer to deduce the equation of the CAPM in each.

Describe your role and responsibility as logistic manager : Describe your role and responsibility as the Logistic Manager - The power outage has affected four counties in Northern Indiana, and three counties in Illinois, including Cook County.

User Account

All Pages