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Assume the binomial model. So = 4, u = 4, d = , r = 3. Use fractions; if using dec- imals instead, leave at
Assume the binomial model. So = 4, u = 4, d = , r = 3. Use fractions; if using dec- imals instead, leave at least four digits after the dot. Recall that if a random variable X depends on only the first n tosses, then we write X(wi...wn) as an abbreviation for Xw1 ...wn); for example, if N = 3 and X depends on the first toss only, then we can write X (H) = 1 or X(HHH) = X(HHT) = X(HTH) = X(HTT) = 1. (4) (7+6+7=20 points) (a) Observe from Definition 2.3.1 that if x > 0 then n[X] > 0 for any n (no need to prove this). Show that |E,[X]| 0 then n[X] > 0 for any n (no need to prove this). Show that |E,[X]|
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