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Problem 3. (3pts) Consider the following simplified model of a stock market with a bullish bias. The probability of the stock market being up on
Problem 3. (3pts) Consider the following simplified model of a stock market with a bullish bias. The probability of the stock market being up on any given day is 52%, the rest being down days. The gains on up days are always 1.2%, while the losses on down days are always 1%. Approximate the probability that the value of the stock market has increased by at least 30% after 1,000 days. Problem 3. (3pts) Consider the following simplified model of a stock market with a bullish bias. The probability of the stock market being up on any given day is 52%, the rest being down days. The gains on up days are always 1.2%, while the losses on down days are always 1%. Approximate the probability that the value of the stock market has increased by at least 30% after 1,000 days
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