Thread: Binomial Lattace Model

I need to calculate the pdf for X_i after one year given:
This assumes there is a move in the stock market, either up or down each week.
up=1.012
down=.99
p=.52
n=52 weeks

i
Do I use S_n = S_0 *u^n-i * d^i ?

Not sure how to show this.

Thanks

Originally Posted by taypez

I need to calculate the pdf for X_i after one year given:
This assumes there is a move in the stock market, either up or down each week.
up=1.012
down=.99
p=.52
n=52 weeks

i
Do I use S_n = S_0 *u^n-i * d^i ?

Not sure how to show this.

Thanks

The probability of upward movements and downward movements is:



so the

RonL