Excel is the advised software tool for this assignment.

1.Choose a stock and download historical data from

http://download.macrotrends.net/stocks/stock-screener.

2.Calculate the log returns for each day on the list (you could use opening prices or closing prices).

3.Calculate the volatility for the whole data set. Assume volatility is (approximately) constant through time.

4.Calculate the mean of the interest rate over the first year.

5.Assume the prior distribution of the interest rate is normal with the mean over the first year and volatility calculated above and is normally distributed. Use the second year of data to update the prior to a posterior distribution for the interest rate.

6.Repeat the previous problem based on additional data from the third year of prices.

7.If you were to continue updating the distribution based on more and more data, what would happen?