(a) What is the probability that the price 3 months from now is greater than 105

(b) Suppose that price of the stock hits 105 on the second month. What is the probability

that the price will be 110 or greater in the third month ?

9. (a) Arrivals of customers into a store follow a Poisson process with rate 20 per hour.

Suppose that the probability that a customer buys something is 0.30.

(i) Find the expected number of sales made during an eight-hour business day.

(ii) Find the probability that 10 or more sales are made in one hour.

(0) Let B(t) be the standard Brownian motion. Find (1) P(B(2) > 3200) = 1) and (ii)

P(B(1) + B(2) > 1).

RR

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