For stocks 1 and 2, S1 $40, S2 $100, and the return correlation is 0 45 Let r 0 08, 1 0 30, 2 0 50, and 1 2 0 Generate 1000 1 month prices for the two stocks For each stock, compute the mean and standard deviation of the continuously compounded return Also compute the return correlation ...

The simulations should be done by generating 1000 standard ...

For stocks 1 and 2, S1 = $40, S2 = $100, and the return correlation is 0.45.

Question:

For 1 and 2, S1 = $40, S2 = $100, and the return correlation is 0.45. Let r = 0.08, σ1= 0.30, σ2 = 0.50, and δ1= δ2 = 0. Generate 1000 1-month prices for the two For each stock, compute the mean and standard deviation of the continuously compounded return. Also compute the return correlation. Stocks
Stocks or shares are generally equity instruments that provide the largest source of raising funds in any public or private listed company's. The instruments are issued on a stock exchange from where a large number of general public who are willing...