Table 14-2 The Following Data Consists of a Matrix of Transition Probabilities

question 60

Multiple Choice

Table 14-2
The following data consists of a matrix of transition probabilities (P) of three competing retailers, the initial market share π(0) .Assume that each state represents a retailer (Retailer 1, Retailer 2, Retailer 3, respectively) and the transition probabilities represent changes from one month to the next.
P = π(0) = (0.3, 0.6, 0.1)
-Using the data given in Table 14-2, what is the equilibrium market share?

• A)(0.55, 0.33, 0.12)
• B)(0.44, 0.43, 0.12
• C)(0.55, 0.12, 0.33)
• D)(0.47, 0.40, 0.13)

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Definitions:

Current Price

The market value of a stock, bond, or commodity at which it can be bought or sold at a particular time.

Conversion Ratio

The number of shares an investor gets for converting a convertible security into common stock.

Conversion Premium

The additional cost over the current market value to convert a convertible security into the underlying stock.

Issuance

The process of offering new securities for sale to the public or private investors by a company or government entity.