Grinstead-Snell-Probability · Problem 7.1.2

Sums of Random Variables

Mathematics · sums-discrete-random-variables-convolution

Problem

The price of a stock on a given trading day changes according to the distribution pX=(−10121/41/21/81/8).p_X = \begin{pmatrix} -1 & 0 & 1 & 2 \\ 1/4 & 1/2 & 1/8 & 1/8 \end{pmatrix}. Find the distribution for the change in stock price after two (independent) trading days.

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