Suppose that the successive daily changes of the price of a given stock are assumed to be independent and identically distributed random variables with probability mass function given by

Then the probability that the stock’s price will increase successively by 1, 2, and 0 points in the next three days is P{X1 = 1, X2 = 2, X3 = 0} = (.20)(.10)(.30) = .006 where we have let Xi denote the change on the ith day.

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-3 with probability .05 -2 with probability.10 -1 with probability .20 P{daily change is i) = 0 with probability .30 1 with probability .20 2 with probability.10 3 with probability .05