easy · Quantitative Finance

In a Markov Chain, what defines a 'Stationary Distribution' π?

  1. A distribution that remains unchanged after one transition step: π P = π.
  2. The distribution reached after exactly one step starting from state 0.
  3. A distribution where the transition matrix P is an identity matrix.
  4. A distribution where every state has an equal probability of 1/n.

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