• We are pleased to announce that the winner of our Feedback Prize Draw for the Winter 2024-25 session and winning £150 of gift vouchers is Zhao Liang Tay. Congratulations to Zhao Liang. If you fancy winning £150 worth of gift vouchers (from a major UK store) for the Summer 2025 exam sitting for just a few minutes of your time throughout the session, please see our website at https://www.acted.co.uk/further-info.html?pat=feedback#feedback-prize for more information on how you can make sure your name is included in the draw at the end of the session.
  • Please be advised that the SP1, SP5 and SP7 X1 deadline is the 14th July and not the 17th June as first stated. Please accept out apologies for any confusion caused.

CT4 April 13' Q11ii

E

Edward Smith

Member
What does the questions mean by the nature of the boundaries? The answer suggests a 'mixed type', which implies the process operates in continuous time, which doesn't seem to make sense given that changes in level can only happen at the end of each year?
 
Hi

The types of boundaries first come up in section 5.4 of chapter 2. The options are
  • absorbing boundary - where the probability of leaving the state at the next step is 0
  • reflecting boundary - where the probability of leaving the state at the next step is 1
  • mixed boundary - anything in between
In this case we have mixed boundaries, since there is a non-zero probability of remaining in the boundary state and a non-zero probability of leaving the boundary state in the next step.

Hope that helps

DAve
 
Back
Top