The price of a share of a particular stock listed on the New York Stock Exchange
ID: 461482 • Letter: T
Question
The price of a share of a particular stock listed on the New York Stock Exchange is currently $38. The following probability distribution shows how the price per share is expected to change over a three-month period: Stock Price Change ($) Probability -3 0.15 -2 0.10 -1 0.10 0 0.05 1 0.15 2 0.30 3 0.15 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. Stock Price Change Probability Interval -3 0.15 but less than -2 0.10 but less than -1 0.10 but less than 0 0.05 but less than +1 0.15 but less than +2 0.30 but less than +3 0.15 but less than With the current price of $38 per share and the random numbers 0.7711, 0.8007, 0.4501 and 0.5857, simulate the price per share for the next four 3-month periods. Random Number Price Change Ending Price Per Share 0.7711 $ 0.8007 $ 0.4501 $ 0.5857 $ What is the ending simulated price per share? $
Explanation / Answer
Ending simulated price per share = $45
a. Stock Price Change Probability Cumulative probability Interval -3 0.15 0.15 00-0.14 -2 0.1 0.25 0.15-0.24 -1 0.1 0.35 0.25-0.34 0 0.05 0.4 0.35-0.39 1 0.15 0.55 0.39-0.54 2 0.3 0.85 0.55-0.84 3 0.15 1 0.85-0.99Related Questions
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