Use Norm.S.Inv(Rand( )) to produce a simulation of monthly stock prices, as illustrated below. 1 SIMULATING A

Use Norm.S.Inv(Rand( )) to produce a simulation of monthly stock prices, as illustrated below.

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1 SIMULATING A LOGNORMAL PRICE PROCESS 2 Initial stock price 3 Mean return, m 4 Return sigma, s 5 Delta t 12 12% 35% 8% <-- =1/12 Random Stock Month price 12 7 number 1 0.3021 12.4963 <-- =C8*EXP($B$3*$B$5+$B$4*SQRT($B$5)*B9) 0.9810 0.1774 -1.1420 10 2 13.9371 11 12 13 3 14.3318 16 4 12.8982 15 0.5932 13.8325 14 0.7335 15.0463 14 -1.7615 0.6826 0.4070 15 12.7198 13 16 8 13.7649 17 14.4869 12 18 10 -0.7262 13.5974 11 -0.5846| 0.9055 19 11 12.9464 20 12 14.3293 10 21 9 22 8 23 Cell B20 contains formula 24 0 1 2 3 4 5 6 7 8 9 10 11 12 =NORMSINV(RAND()) 25 -- - - - - -