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
Correct Answer:
Verified
Correct Answer:
Verified
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