---
title: "Recitation 3 Note"
author: "Yiming Gong"
date: "2021-07-22T02:56:26Z"
link: "https://bookdown.org/yg484/rec_3_note/"
length_weight: "2.3%"
pinned: false
---

This is class note for recitation 3 on July 22th. [...] restrict the time scale to two instants only: The price of one share at time \(t\) will be denoted by \(S(t)\). The
current stock price \(S(0)\) is known to all investors \(A(t)\) and \(A(0)\) \[
S(t)-S(0)
\] The return is defined as: \[
K_S = \frac{S(t)-S(0)}{S(0)}, t= 1
\] Is the return \(K_S\) a fixed value or a random value? Similar for return of bond: \[
K_A = \frac{A(t)-A(0)}{A(0)}, t = 1
\] Is the return \(K_A\) a fixed value or a random value? The future stock price \(S(1)\) is a random variable with at least two
different ...
