Unformatted text preview: option which allows me (if I wish to do so) the option of buying the stock 13 weeks from now at a price of $55. Of course if the stock price at the time is $50 or less there is no beneﬁt of the option and it is not exercised. Assume that the return from the option is R = max( P-55 , 0) where P is the price of the stock in 13 weeks. Calculate E ( R ) . Problem 4-Let X be a r.v. with moment generating function M X ( t ) = 1 3 e-t-2 , t < ln 3 2 . Find f X ( . ) on R X . Problem 5-The number of calls an ofﬁcer receives during a working day is a Poisson(5) random variable. The ofﬁcer misses a call with probability . 01 independently from call to call. Find the probability that the ofﬁcer answers exactly 10 calls in a working day....
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This note was uploaded on 01/26/2012 for the course ECON 401 taught by Professor Burbidge,john during the Fall '08 term at Waterloo.
- Fall '08