Chapter4Q07answer1[1] - is probably unreasonable...

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Chapter 4 Question 7 a) p (all three stocks rise in value) = p (first stock rises in value) × p (second stock rises in value) × p (third stock rises in value) = 0.6 × 0.8 × 0.4 = 0.192 b) The assumption of independence between the movements in the prices of the three stocks
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Unformatted text preview: is probably unreasonable, particularly if the three stocks belong to the same industrial sector....
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