(Solution Download) The price of a share of a particular stock listed


The price of a share of a particular stock listed on the New York Stock Exchange is currently $39. The following probability distribution shows how the price per share is expected to change over a three-month period:
Stock Price Change ($) Probability
-2 ........... 0.05
-1 ........... 0.10
0 ........... 0.25
+1 ........... 0.20
+2 ........... 0.20
+3 ........... 0.10
+4 ........... 0.10
a. Set up intervals of random numbers that can be used to generate the change in stock price over a three-month period.
b. With the current price of $39 per share and the random numbers 0.1091, 0.9407, 0.1941, and 0.8083, simulate the price per share for the next four 3-month periods. What is the ending simulated price per share?

 







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