Probabilities in a coin-one thousand tossing experiment
Explain an example of probabilities in a simple coin-tossing experiment one thousand tosses.
Expert
Probabilities in a simple coin-tossing experiment: one thousand tosses
Now here’s what your total profit will be like after one thousand tosses as in figure. Therefore expected profit after one toss is
(1/6) x 10 + (5/6) x (-1) = 5/6 ≈ 0.833
Standard deviation is therefore
√(1,000 x (605/54)) ≈ 34.7
Notice how the standard deviation has grown much less than the hope. That’s due to the square-root rule. In finance we frequently assume that equity all returns are normally distributed. We could argue here, this ought to be the case by saying such that returns over any finite period, one day, say that are made up of many, several trades over smaller time periods, along with the result as the returns over the finite timescale are normal thanks to the Central Limit Theorem.
How are brokers compensated? What is the role of a broker in security transactions?
What kind of insurance organisations usually takes on the greater risks: a life insurance company or casualty insurance company and a property?
How is a portfolio optimized for the greatest expected return in a prescribed risk level?
Illustrates an example of binomial model as complete market?
What is Speed in option value?
What is the meaning of “U.S. dollar weakens in the foreign exchange market”?
How is Value of a Contract solved?
What is shadow Greeks?
What is Girsanov’s Theorem and Why is it Important in Finance?
What is Attribution?
18,76,764
1937632 Asked
3,689
Active Tutors
1418972
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!