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What is the distribution of the stock price at time two

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Reference no: EM131001504

A certain stock has a price of 100 at time 0. At any time k, let Mk denote the average of the prices at times 0, 1, ... , k. The price at time k + 1 will be either Mk, Mk + 20, or Mk - 20, each with probability 1/3. What is the distribution of the stock price at time 2? What is the expected value at time 2? Is this process a Markov process, martingale, submartingale, supermartingale?

Reference no: EM131001504

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