The price of a share of a particular stock listed on the New York Stock Exchange
ID: 464962 • 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:
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 $38 per share and the random numbers 0.6905, 0.4689, 0.1747 and 0.8113, simulate the price per share for the next four 3-month periods.
What is the ending simulated price per share?
$
Explanation / Answer
Stock Price Change
Probability
Interval
-1
0.05
.00 but less than .05
0
0.05
.05 but less than .10
+1
0.10
.10 but less than .20
+2
0.20
.20 but less than .40
+3
0.20
.40 but less than .60
+4
0.25
.60 but less than .85
+5
0.15
.85 but less than 1.00
2.
Current price is $38 per share
Random NUmber
Price Change
Ending Price per share
0.6905
+4
$42
0.4689
+3
$45
0.1747
+1
$46
0.8113
+4
$50
Ending Price per share :$50
Stock Price Change
Probability
Interval
-1
0.05
.00 but less than .05
0
0.05
.05 but less than .10
+1
0.10
.10 but less than .20
+2
0.20
.20 but less than .40
+3
0.20
.40 but less than .60
+4
0.25
.60 but less than .85
+5
0.15
.85 but less than 1.00
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