Table 14-1 The Following Data Consists of a Matrix of Transition Probabilities

question 57

Multiple Choice

Table 14-1
The following data consists of a matrix of transition probabilities (P) of three competing companies,and the initial market share π(0) .Assume that each state represents a company (Company 1,Company 2,Company 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 in Table 14-1,and assuming that the transition probabilities do not change,in the long run what market share would Company 2 expect to reach? (Rounded to two decimal places. )

• A)0.30
• B)0.32
• C)0.39
• D)0.60
• E)None of the above

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Definitions:

TIE

Times Interest Earned, a financial ratio that measures a company's ability to meet its debt obligations based on its current income.

Operating Costs

The day-to-day expenses involved with running a business, excluding costs associated with production.

Assets

Resources owned or controlled by an entity with expected future economic benefits.

Sales

The total revenue earned from the sale of goods or services related to a company's primary operations.