Question

Question 8, 11.1.21 A stock can go up, go down, or stay unchanged. How many possibilities are there if you own 9 stocks?​

Answer 1

Answer: 19683

Step-by-step explanation:

Consider 2 stocks that either go up, down, or stay unchanged. We'd have a 3 by 3 table to show the 3*3 = 3^2 = 9 different outcomes.

This idea can be extended to 3 stocks to have 3*3*3 = 3^3 = 27 outcomes

4 stocks would have 3^4 = 81 outcomes and so on

Therefore, 9 stocks have 3^9 = 19683 outcomes