Your stockbroker suggests that you buy 1,000 shares of International Business Electronics (IBE). The stock currently...

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Your stockbroker suggests that you buy 1,000 shares of International Business Electronics (IBE). The stock currently is selling at $38.75 per share. From research over the internet you discovered that the stock is quite volatile and based on recent past data distribution is as follows: 21% of the weeks it goes up $1.00 17% of the weeks it goes up $0.50 10% of the weeks it remains unchanged 35% of the weeks it goes down $0.50 17% of the weeks it goes down $1.00 (a) Calculate theoretical expected profit/ loss per share and for 1000 shares 1 23 st 4 5 6 7 8 9 10 11 12 13 14 15 16 17 A B Price Ch Q3-Stock Simulation Theoretically, the expected value of the investment is given by S (P x V) P = Probability of stock at a given state V = Change in value of the stock Expected Value per share= Σ (P x V) = Expected Profit/Loss for 1500 shares = Using simulation we can find expected value as follows; 1.0 0.5 0.0 -0.5 -1.0 E Prob. 0.21 0.17 0.10 0.35 0.17 Cum Prob R# F G (b) Create a worksheet to simulate the price of the stock and the value of your portfolio for 20 weeks assuming the above distribution. You should have 20 rows in the main part of your worksheet, one for each week. You should have separate columns for the week. number, a random number, the price change for that week, the closing price of the stock that week, the value of your portfolio. Have separate cells at the top of the worksheet for the resulting High, Low, and Close for the stock price over the 20 weeks, that is the highest price the stock reaches, the lowest price the stock reaches, and the closing price after 20 weeks. Have separate cells that shows the amount of money you would have made (or lost) on the investment of 1,000 shares and per share. Use only the random numbers provided. (c) Based on your simulations, is this a good investment? Discuss. 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 A Week 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 B R# 47 2 8 13 78 94 89 24 47 2 8 13 78 41 77 96 82 22 96 92 C Pr Ch E Price at end of week F G Portfolio Value H Stock Price High Low J Close Your stockbroker suggests that you buy 1,000 shares of International Business Electronics (IBE). The stock currently is selling at $38.75 per share. From research over the internet you discovered that the stock is quite volatile and based on recent past data distribution is as follows: 21% of the weeks it goes up $1.00 17% of the weeks it goes up $0.50 10% of the weeks it remains unchanged 35% of the weeks it goes down $0.50 17% of the weeks it goes down $1.00 (a) Calculate theoretical expected profit/ loss per share and for 1000 shares 1 23 st 4 5 6 7 8 9 10 11 12 13 14 15 16 17 A B Price Ch Q3-Stock Simulation Theoretically, the expected value of the investment is given by S (P x V) P = Probability of stock at a given state V = Change in value of the stock Expected Value per share= Σ (P x V) = Expected Profit/Loss for 1500 shares = Using simulation we can find expected value as follows; 1.0 0.5 0.0 -0.5 -1.0 E Prob. 0.21 0.17 0.10 0.35 0.17 Cum Prob R# F G (b) Create a worksheet to simulate the price of the stock and the value of your portfolio for 20 weeks assuming the above distribution. You should have 20 rows in the main part of your worksheet, one for each week. You should have separate columns for the week. number, a random number, the price change for that week, the closing price of the stock that week, the value of your portfolio. Have separate cells at the top of the worksheet for the resulting High, Low, and Close for the stock price over the 20 weeks, that is the highest price the stock reaches, the lowest price the stock reaches, and the closing price after 20 weeks. Have separate cells that shows the amount of money you would have made (or lost) on the investment of 1,000 shares and per share. Use only the random numbers provided. (c) Based on your simulations, is this a good investment? Discuss. 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 A Week 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 B R# 47 2 8 13 78 94 89 24 47 2 8 13 78 41 77 96 82 22 96 92 C Pr Ch E Price at end of week F G Portfolio Value H Stock Price High Low J Close

Answer rating: 100% (QA)

Answer a Q3Stock Simulation Expected Value per share 387 Expected profit loss for 1000 shares 38700 ... View the full answer