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Suppose that for another (not fair) coin the probability of heads and tails are ph = 0.75 and pt = 0.25, respectively. Compute the


 

Suppose that for another (not fair) coin the probability of heads and tails are ph = 0.75 and pt = 0.25, respectively. Compute the expected dollar return on wealth k periods ahead, and the serial correlation of your dollar return process for this new coin toss. Suppose the equity price of Apple generated the same patterns as your wealth with the unfair coin tosses in part (d). Would the return process on Apple shares be consistent with the efficient market hypothesis now?

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Expected Dollar Return k periods For this unfair coin let Wk be the wealth at period k Gain per head ... blur-text-image

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