8010 Exam Dumps | If X represents a matrix with ratings transition probabilities for one year, the transition probabilities

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PRMIA.8010.v2022-06-27.q87
Question 60

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Question 60/87

If X represents a matrix with ratings transition probabilities for one year, the transition probabilities for 3 years are given by the matrix:

A. P ^ (-3)

B. P x P x P

C. 3 [P ^ (-1)]

D. 3 [P]

Correct Answer: B

Explanation
Assuming timeinvariance and the Markov property, it is easy to calculate the transition matrix for any time period as P^n, where P is the given transition matrix for one period and n the number of time periods that we need to compute the new transition matrix for. ThusChoice 'b' is the correct answer.

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