Solution

ID: past-exam-of-the-probability-statistics-and-options-ii-course-of-the-university-of-oxford/2011/o/o4/a/solution

Ignoring the multinomial coefficient, the likelihood is . Maximize with . A Lagrange multiplier gives ; summing the resulting gives . Thus
Because every count is positive, the log-likelihood is strictly concave on the interior simplex and this solution is its unique maximum.

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