Jim Cramer, a Stock Analyst, Models the Movement of the Closing

Multiple Choice

Jim Cramer, a stock analyst, models the movement of the closing price in NYSE of the stock WidgetsR-Us Inc. (symbol: WRU) as a Markov chain with a transition time of 1 day. There are two states in this Markov system-State A, the closing price increased or stayed the same from the previous day and State B, the closing price decreased from the previous day. Suppose that the system is on State A at the end of today, what is the probability that it will be in State B after two trading days (48 hours) ?

A) 0.52
B) 0.24
C) 0.28
D) 0.40