The price of a particular highly volatile stock either increases 20% or decreases 25% in any given week. The probability of an increase in any week is 45%, independent of the stock’s performance on other weeks. The current price of the stock is $10.
(a) Determine the probability that the stock’s price exceeds $12 five weeks from now.
(b) What is the stock’s expected value two weeks hence? Four weeks hence?

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