In the question above (subject), why is the probability from state 2 to 1 equal to 0.3 and not 0.2. The question states there is a 20 percent chance of moving up one level; not 30%. Same question applies for moving from state 3 to 4?
The question says "Subject to a maximum level of Excellent and a minimum level of Poor" So, if they are on Level 2, there is a 20% chance of moving down 1 level to Level 1 + 10% chance of moving down 2 levels to Level 1 20% + 10% = 30% Good luck! John
