• 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.

Sep 2011, #11

M

MindFull

Ton up Member
Hiya,

I was wondering if anyone could explain to me where the examiners got the initial conditions of k(0) and h(0), as well as how it all fits in with the question. I'm just not sure where to start with this one.

Thanks!
 
Look at the definition of h(0), say.

h(0)=2p1(0)-p2(0)

pi(0) is the prob that the economy is in state i at time 0.

Since we're told the economy is in state 2 at time 0, we must have:

p1(0)=0 and p2(0)=1

This gives h(0)=-1.

The same method is used to get k(0)
 
You must log in or register to reply here.
Back
Top