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Explanation:

\begin{aligned} S_t - S_{t-1} &= a(\mu - S_{t-1}) \\ 60 - 40 &= 0.5(\mu - 40) \\ 20 &= 0.5\mu - 20 \\ \mu &= 80 \end{aligned}

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Q.2654 Given the following data about a variable $S$: $S_{t-1} = 40$, $S_t = 60$, Mean reversion rate = 0.5. Calculate the long-run mean value for the variable. | Financial Risk Manager Part 2 Quiz - LeetQuiz

Financial Risk Manager Part 2

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Q.2654 Given the following data about a variable SSS: St−1=40S_{t-1} = 40St−1​=40, St=60S_t = 60St​=60, Mean reversion rate = 0.5. Calculate the long-run mean value for the variable.

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Q.2654 Given the following data about a variable $S$ : $S_{t-1} = 40$ , $S_t = 60$ , Mean reversion rate = 0.5. Calculate the long-run mean value for the variable.