Robin invests $3,210 in an account that is compounded annually and pays
1 answer:
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In this case the 5 is on top so it is the Numerator
Answer:
Step-by-step explanation:
Given data:
SS={0,1,2,3,4}
Let probability of moving to the right be = P
Then probability of moving to the left is =1-P
The transition probability matrix is:
Calculating the limiting probabilities:
π0=π0+Pπ1 eq(1)
π1=(1-P)π0+π1+Pπ2 eq(2)
π2=(1-P)π1+π2+Pπ3 eq(3)
π3=(1-P)π2+π3+Pπ4 eq(4)
π4=(1-P)π3+π4 eq(5)
π0+π1+π2+π3+π4=1
π0-π0-Pπ1=0
→π1 = 0
substituting value of π1 in eq(2)
(1-P)π0+Pπ2=0
from
π2=(1-P)π1+π2+Pπ3
we get
(1-P)π1+Pπ3 = 0
from
π3=(1-P)π2+π3+Pπ4
we get
(1-P)π2+Pπ4 =0
from π4=(1-P)π3+π4
→π3=0
substituting values of π1 and π3 in eq(3)
→π2=0
Now
π0+π1+π2+π3+π4=0
π0+π4=1
π0=0.5
π4=0.5
So limiting probabilities are {0.5,0,0,0,0.5}