Re: ROR Derivation Question
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Now they calculate risk of ruin r as:
r = q + (1-q)*r^2.
I'm really confused by what r would be on the right side of this formula. Is it possible to give p,q, and r a value at this point on the right side of the formula in order to come up with a value for r on the left side?
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r is the risk of ruin for a $1 bankroll if we play forever. It is the same on both sides of the equation.
You have found the correct derviation.
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