The price of a share of a particular stock listed on the New York Stock Exchange

Question

The price of a share of a particular stock listed on the New York Stock Exchange is currently $36. The following probability distribution shows how the price per share is expected to change over a three-month period:

Set up intervals of random numbers that can be used to generate the change in stock price over a three-month period. If required, round your answers to two decimal places.

With the current price of $36 per share and the random numbers 0.5913, 0.9853, 0.9371 and 0.1389, simulate the price per share for the next four 3-month periods.

What is the ending simulated price per share?

$  

Stock Price Change ($) Probability -4 0.20 -3 0.25 -2 0.15 -1 0.05 0 0.10 1 0.20 2 0.05

Explanation / Answer

ending simulated price per share=  $ 32

Stock Price Change Probability Cumulative Probability Interval -4 0.20 0.20 0-19 -3 0.25 0.45 20-44 -2 0.15 0.60 45-59 -1 0.05 0.65 60-64 0 0.10 0.75 65-74 1 0.20 0.95 75-94 2 0.05 1.00 95-99

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