Probability that second day-s stock price is more than first

Reference no: EM13144998

Assume that for a certain stock, its price today is $50. Further assume that for each day,the stock price on the next day can either go up by $10 with probability 40% or go down by $10 with probability 60%.

Call today day 0, consider the events
A = (1st day's price is $40);
B = (2nd day's price is $50);
C = (the stock price goes up by $10 on the 2nd day).

(a) Is A independent of C?
(b) What is the probability that the 2nd day's stock price is $50 given that the 1st day's price is $60?
(c) What is P(B)?
(d) Is A independent of B?

Reference no: EM13144998

Questions Cloud

Transactions on the assets-liabilities : Required: Show the effects of the below transactions on the assets, liabilities and owner's equity.

What situation should the company lower price of its windows : Materials and labor are the only variable costs. Under what situation should the company lower the price of its windows?

Why do not bacteria grow throughout an agar medium : Why don't bacteria (escpecially motile forms) grow throughout an agar medium, which is 97% water?

Calculate the net cash provided by operating activities : October Corporation reported net income of $46,000 in 2012. Depreciation expense was $17,000 and unrealized holding losses on temporary investments (FV-NI) were $3,000. The following accounts changed as indicated in 2012:

Probability that second day-s stock price is more than first : The stock price on the next day can either go up by $10 with probability 40% or go down by $10 with probability 60%. What is the probability that the 2nd day's stock price is $50 given that the 1st day's price is $60?

Write a response to these congress-people explaining : Write a response to these Congress-people explaining the importance of neutrality in financial accounting and reporting.

How much is the realized gain : What is the basis in the like-kind property received and what is the basis in the not like-kind property received

Income of the partnership : In the first year of the partnership, its cash-basis incom was $100,000, $50,000 of which was the collection of the transferred receivables. When is the income of the partnership reported and by whon?

How has the concept of asset impairment changed accounting : How has the concept of asset impairment changed accounting for long lived assets under the historical cost model?

User Account

All Pages