A Random Walk Process for a Single Stock Consists of the Toss

question 49

Multiple Choice

A random walk process for a single stock consists of the toss of a fair coin at the end of each day. If the outcome is heads, the stock price increases by 1.25 percent. If the outcome is tails, the stock price decreases by 0.75 percent. What is the drift of such a process?

• A)+1.25 percent
• B)−0.75 percent
• C)+0.25 percent
• D)+2 percent

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Biopsychosocial Approach

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