Find the probability distribution of y

Reference no: EM13204745

If investors invests $10,000 for one month in a company whose stock either goes up by 80% after a month with probability 1/2 or drops 60% with probability 1/2. After one month, the investor sells this stock and uses the proceeds to buy stock in a second company. Let the random variable Y denote the value of the $10,000 investment after two months.

(a) Find the probability distribution of Y.
(b) What is the expected profit earned on these contracts? Report units with your answer.
(c) What is the standard deviation of the earnings?

Reference no: EM13204745

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