Suppose that you are looking the N-binomial model with the no-arbitrage assumption with 2 = u = 1/d, N = 5, and So = 8. Define the process (Yo, Y₁,..., YN) by Yn So + S₁+...+ Sn n+1 Determine whether or not this process is a Markov process in the risk-neutral measure, and prove your assertion. Which of the assumptions could be relaxed and still ahve your argument work?

The computer center at Rockbottom University has been experiencing computer downtime. Let us assume that the trials of an associated Markov process are defined as one-hour periods and that the probability of the system being in a running state or a down state is based on the state of the system in the previous period. Historical data show the following transition probabilities.   To From Running Down Running 0.80 0.20 Down 0.30 0.70 (a) If the system is initially running, what is the probability of the system being down in the next hour of operation?   (b) What are the steady-state probabilities of the system being in the running state and in the down state? (Enter your probabilities as fractions.) Running?1=Down?2=

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PLEASE HELP ME GET THE ANSWER FOR PART B AND IT HAS TO BE FRACTION/INTEGER/ OR EXACT DECIMAL AND THE ASWER I GOT 0.66 FOR FIRST AND 0.99 FOR SECOND AND BOTHER WERE WRONG.   The computer center at Rockbottom University has been experiencing computer downtime. Let us assume that the trials of an associated Markov process are defined as one-hour periods and that the probability of the system being in a running state or a down state is based on the state of the system in the previous period. Historical data show the following transition probabilities.   To From Running Down Running 0.90 0.10 Down 0.20 0.80 (a) If the system is initially running, what is the probability of the system being down in the next hour of operation? ANSWER FOR PART A IS 0.10 (b) What are the steady-state probabilities of the system being in the running state and in the down state? (Enter your probabilities as fractions.) Running?1=  Your answer must be a fraction, integer, or exact decimal. .66 IS…

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Find the vector W of stable probabilities for the Markov chain whose transition matrix appears below  P =  0.6 0.4 0.3 0.7 w = [        ,        ] ?

What is the transaction probability p22 value ?

For the following Markov models: a ito dove b) find the stationary probability distribution on paper, SUre 5A An ion channel can be in either open or closed state. If it is open, then it has probability 0.1 of closing in 1 microsecond; if closed, it has probability 0.3 of opening in 1 microsecond. 5B An individual can be either susceptible or infected, the probability of infection for a susceptible person is 0.05 per day, and the probability an infected person becoming susceptible is 0.12 per day. 5C The genotype of an organism can be either normal (wild type) or mutant. Each generation, a wild type individual has probability 0.03 of having a mutant offspring, and a mutant has probability 0.005 of having a wild type offspring.

The purchase patterns for two brands of toothpaste can be expressed as a Markov process with the following transition probabilities. From Το Special B MDA Special B 0.92 0.08 MDA 0.04 0.96 (a) Which brand appears to have the most loyal customers? Explain. ---Select--- has the most loyal customers because % stay with them and only other brand, as opposed to ---Select--- where only % stay with them and % switch to the % switch. (b) What are the projected market shares for the two brands? (Enter exact numbers as integers, fractions, or decimals.) Special B π 1 == MDA π2 =

Please don't provide handwritten solution .....