During any day, I may own either 0 or 1 share of a stock. The price of the stock is governed by the Markov chain shown in Table. Tomorrow’s Price Today’s Price $0 $1 $2 $3 $0 .5 .3 .1 .1 $1 .1 .5 .2...

During any day, I may own either 0 or 1 share of a stock. The price of the stock is governed by the Markov chain shown in Table.

At the beginning of a day in which I own a share of stock, I may either sell it at today’s price or keep it. At the beginning of a day in which I don’t own a share of stock, I may either buy a share of stock at today’s price or not buy a share. My goal is to maximize my expected discounted profit over an infinite horizon (use β = .95).

a Use the policy iteration method to determine an optimal stationary policy.

b Use linear programming to determine an optimal stationary policy.

c Perform two iterations of value iteration.

d Find a policy that maximizes average daily profit.