Question: Hello, Can you help me solve this problem. I am struggling with it. Please list out the process in solving this problem. You discover a

Hello, Can you help me solve this problem. I am struggling with it. Please list out the process in solving this problem.

You discover a technical 'anomaly' in the US stock market.You find that stocks that go up X% or more 2 days in a row have an expected alpha of X/100% the following day (for example if a stock goes up 6% and 9%, then the next day its expected alpha is 0.06%).

Suppose stock A has a BID-ASK spread of 0.2%, and has gone up 10% and 15% percent in the last 2 days.What is your expected profit (in dollars)if you choose to implement your strategy and take a $1000 position in the stock for one day?

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