A probability question
From: Steven Ma (mhchk_at_hotmail.com)
Date: 09/26/04
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Date: Sun, 26 Sep 2004 16:35:14 +0000 (UTC)
Hello,
My question is:
A model for the movement of a stock supposes that, if the present
price of the stock is s, then after one time peroid, it will either be
us with probability p or ds with the probability 1-p. Assuming that
successive movements are independent, approximate the probability that
the stock's price will be at least 30% after the next 1000 time
periods if u=1.012, d=0.99, p=0.52
i try to work it out by:
s*u*pow(x)*d*pow(1000-x) >=1.3s
by taking natural log,
I got x >= 469.2, where x is the number of times that the stock should
raise.
However, how can I find the probability?
regards,
Steven Ma
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