A stock priced at $10 has a 60 percent probability of moving up and a 40 percent probability of moving down. If it moves up, it increases by a factor of 1.06. If it moves down, it decreases by a factor of 1/1.06. What is the expected stock price after two successive periods（）
A. $10.03.
B. $11.24.
C. $10.27.
参考答案：C
解析：
If the stock moves up twice, it will be worth $10×1.06×1.06=$11.24. The probability of this occurring is 0.60×0.60=0.36. If the stock moves down twice, it will be worth $10×(1/1.06)×(1/1.06)=$8.90. The probability of this occurring is 0.40×0.40=0.16. If the stock moves up once and down once, it will be worth $10×1.06×(1/1.06)=$10.00. This can occur if either the stock goes up then down or down then up. The probability of this occurring is 0.60×0.40+0.40×0.60=0.48. Multiplying the potential stock prices by the probability of them occurring provides the expected stock price: ($11.24×0.36)+($8.90×0.16)+($10.00×0.48)=$10.27.