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The initial price of a stock is $100. Consider the following model for the movement of astocks price: at each second the price can increase
The initial price of a stock is $100. Consider the following model for the movement of astocks price: at each second the price can increase by 0.05% with probability p or decreaseby 0.05% with probability 1 p (the probability for increase\decrease is independent ofprevious events). Approximate the probability that the stocks price will be at least $105after 1 hour, assuming 1. p = 0.51 and 2. p = 0.5. Is this model realistic?
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