Jim Cramer, a stock analyst, models the movement of the closing price in NYSE of the stock WidgetsR-Us Inc. (symbol: WRU) as a Markov chain with a transition time of 1 day. There are two states in this Markov system-State A, the closing price increased or stayed the same from the previous day and State $\mathrm{B}$, the closing price decreased from the previous day. Suppose that the system is on State A at the end of today, what is the probability that it will be in State A after two trading days (48 hours)?

A) 0.36
B) 0.24
C) 0.12
D) 0.48

Question

Jim Cramer, a stock analyst, models the movement of the closing price in NYSE of the stock WidgetsR-Us Inc. (symbol: WRU) as a Markov chain with a transition time of 1 day. There are two states in this Markov system-State A, the closing price increased or stayed the same from the previous day and State $\mathrm{B}$, the closing price decreased from the previous day. Suppose that the system is on State A at the end of today, what is the probability that it will be in State A after two trading days (48 hours)?

A) 0.36 
B) 0.24 
C) 0.12 
D) 0.48

Quizplus · Accepted Answer

The Answer of Jim Cramer, a stock analyst, models the movement of the closing price in NYSE of the stock WidgetsR-Us Inc. (symbol: WRU) as a Markov chain with a transition time of 1 day. There are two states in this Markov system-State A, the closing price increased or stayed the same from the previous day and State $\mathrm{B}$, the closing price decreased from the previous day. Suppose that the system is on State A at the end of today, what is the probability that it will be in State A after two trading days (48 hours)?

A) 0.36 
B) 0.24 
C) 0.12 
D) 0.48

Jim Cramer, a Stock Analyst, Models the Movement of the Closing