Computing chance that pharmaceutical stock will fall

Reference no: EM1311504

Q1) Let the monthly stock in the pharmaceutical manufacturer in decades after WW2. Average monthly return was 1.4%, with standard deviation of 6.0%.

Without additional information about returns, what suppositions do you wish to make to be able to play “what if” games, like those in the b., c. and d. below? Can you prepare some reservations about suppositions?

a) Making suppositions of a., what fraction of months did stock drop 10% or more? Re-express your result in intuitive form like “one in 10 months”.

b) What fraction of months did same stock increase by at least 10%? How does this frequency compare with frequency of dropping by at least 10%? Is this due to mean or due to the sd of returns?

c) What is the chance that stock will fall by more than 15% next month? What extra assumption are you making when replying this question?

Reference no: EM1311504

Questions Cloud

What is the skier''s launch speed : While on vacation you rent a moped and go cruising around a tropical island. If you take a 10.0° banked curve with a radius of 15.0 meters at 12.0 m/s, what is the minimum coefficient of static friction between your tires and road to keep the tires f..

Evaluate the net operating income for the month : Evaluate the net operating income for the month under variable costing and evaluate the net operating income for the month under absorption costing?

Draw all the forces on the pilot : Two long, parallel conductors carry currents I1 = 3.10 A and I2 = 5.10 A, both directed into the plane of the computer screen. Find out the magnitude and direction of the resultant magnetic field at a point midway between the wires. (b) Find out the ..

The relativistic time dilation formula : Apply those results to get how much slower a clock goes near the earth than one, which is higher up.

Computing chance that pharmaceutical stock will fall : What is the chance that stock will fall by more than 15% next month? What extra assumption are you making when replying this question?

Results of a regression analysis : A bank official reported the results of a regression analysis designed to predict the bank's charges (y), measured in dollars per month, for services rendered to local companies.

Verify the overall break-even point for the company : Verify the overall break-even point for the company by constructing a contribution format income statement showing the appropriate levels of sales for the two products.

Computation of present value of a liability : Computation of present value of a liability and Miner Industries develops an open pit uranium mine

Correlation between savings and capital formation : Write down the relationship between savings, capital formation, and consumption.

User Account

All Pages