7 Consider two stocks. Stock 1 always sells for $10 or $20. If stock 1 is selling...

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7 Consider two stocks. Stock 1 always sells for $10 or

$20. If stock 1 is selling for $10 today, there is a .80 chance that it will sell for $10 tomorrow. If it is selling for $20 today, there is a .90 chance that it will sell for $20 tomorrow.

Stock 2 always sells for $10 or $25. If stock 2 sells today for $10, there is a .90 chance that it will sell tomorrow for

$10. If it sells today for $25, there is a .85 chance that it will sell tomorrow for $25. On the average, which stock will sell for a higher price? Find and interpret all mean first passage times.

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