To find the expected profit, we'll calculate the expected value of the stock price after 2 days and compare it to the initial investment.

Step 1: Initial investment

The cost of 3 shares today is: $\text{Initial Investment} = 3 \times 500 = 1500 \, \text{Rs}$

Step 2: Share price at the end of Day 1

Let the share price increase by 50% with probability 0.6 or decrease by 50% with probability 0.4. After Day 1, the possible outcomes for the share price are:

• Increase by 50%: New price = $500 \times (1 + 0.50) = 750 \, \text{Rs}$
• Decrease by 50%: New price = $500 \times (1 - 0.50) = 250 \, \text{Rs}$

The expected share price at the end of Day 1 is: $\text{Expected Price on Day 1} = 0.6 \times 750 + 0.4 \times 250 = 450 + 100 = 550 \, \text{Rs}$

Step 3: Share price at the end of Day 2

Independent of Day 1, the share price on Day 2 can increase by 20% or decrease by 30%, both with probability 0.5. So, we need to calculate the expected share price for both possible outcomes of Day 1.

Case 1: Price after Day 1 is 750 Rs

• Increase by 20%: New price = $750 \times (1 + 0.20) = 900 \, \text{Rs}$
• Decrease by 30%: New price = $750 \times (1 - 0.30) = 525 \, \text{Rs}$

Expected share price if Day 1 ends with 750 Rs: $\text{Expected Price} = 0.5 \times 900 + 0.5 \times 525 = 450 + 262.5 = 712.5 \, \text{Rs}$

Case 2: Price after Day 1 is 250 Rs

• Increase by 20%: New price = $250 \times (1 + 0.20) = 300 \, \text{Rs}$
• Decrease by 30%: New price = $250 \times (1 - 0.30) = 175 \, \text{Rs}$

Expected share price if Day 1 ends with 250 Rs: $\text{Expected Price} = 0.5 \times 300 + 0.5 \times 175 = 150 + 87.5 = 237.5 \, \text{Rs}$

Step 4: Overall expected price at the end of Day 2

Now, we combine the outcomes of Day 1 and Day 2 to find the overall expected share price at the end of Day 2: [ \text{Overall Expected Price} = 0.6 \times 712