Mathematical Modeling in Finance with Stochastic Processes

(Ben Green) #1

3.1 A Coin Tossing Experiment


3.1 Welcome to my casino!


by recording the flip number, the outcome as “H” or “T” and keeps
track of the cumulative fortune of the gambler so far. It is best to keep
these records in a neat chart, since we will refer to them later.


  1. Each “gambler” should record 100 flips, which takes about 10 to 20
    minutes.


Tossn 1 2 3 4 5 6 7 8 9 10
H or T
Yn= +1,− 1
Tn=

∑n
i=1Yi
Tossn 11 12 13 14 15 16 17 18 19 20
H or T
Yn= +1,− 1
Tn=

∑n
i=1Yi
Tossn 21 22 23 24 25 26 27 28 29 30
H or T
Yn= +1,− 1
Tn=

∑n
i=1Yi
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