Suppose we let p 2 = 0 and write p 1 = p 3 = p in
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Suppose we let p2 = 0 and write p1 = −p3 = p in the trinomial scheme. By matching the mean and variance of ζ(t) and ζa(t) accordingly
show that the parameters v and p obtained by solving the above pair of equations are found to be
Transcribed Image Text:
=r - ΔΙ 2 Ε[ζα (t)] = 2pv – v = var(ζα (t)) = v2 – E[ζα (t)]? = σ? Δι, -
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To solve the equations ECt 2pv v r and Vart v ECt At we can ...View the full answer
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