An analyst kept track of the daily price quotation for a given stock. The frequency data led
Question:
Price x in Dollars P(x)
17 ............ 0.05
17.125 .......... 0.05
17.25 .......... 0.10
17.375 .......... 0.15
17.5 .......... 0.20
17.625 .......... 0.15
17.75 .......... 0.10
17.875 .......... 0.05
18 ............ 0.05
18.125 .......... 0.05
18.25 .......... 0.05
Assume that the stock price is independent from day to day.
a. If 100 shares are bought today at 17 1/4 and must be sold tomorrow, by prearranged order, what is the expected profit, disregarding transaction costs?
b. What is the standard deviation of the stock price? How useful is this information?
c. What are the limitations of the analysis in part (a)? Explain.
Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...
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Related Book For
Complete Business Statistics
ISBN: 9780077239695
7th Edition
Authors: Amir Aczel, Jayavel Sounderpandian
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