Many people believe that the daily change of price
of a company’s stock on the stock market is a random
variable with mean 0 and variance σ^2 . That
is, if Yn represents the price of the stock on the nth
day, then Yn = Yn−1 + Xn where X 1 , X 2 , . . . are independent and
identically distributed random variables with mean 0 and
variance σ^2 . Suppose that the stock’s price today
is 100. If σ^2 = 1, what can you say about the prob-
ability that the stock’s price will exceed 105 after 10 days?