Assume that for the first stock (on a particular day)
P(R)= .4, P(U)= .2, P( D) =.4
and that for the second stock ( on a particular day)
P(R) =.8, P(U) =.1, P(D) =.1
Assuming that these stocks move independently, find the probability that both stocks decline; the probability that exactly one stock rises; the probability that exactly one stock is unchanged; the probability that both stocks rise.
Base on The following situation: An investor holds two stocks, each of which can rise (R), remain unchanged (U), or decline (D) on any particular day.