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

question 20

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%.If the outcome is tails,the stock price decreases by 0.75%.What is the drift of such a process?

• A)+1.25%
• B)-0.75%
• C)+0.25%
• D)+2.0%

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