Estimates the probabilities of price changes, Mathematics

Assignment Help:

Mr. Hoper is in charge of investments for the golden horizon company. He estimates from past price fluctuations in the gold market that the probabilities of price changes on a given day are dependent upon price changes on the previous day. If gold price increases or remains constant, the following distribution represents the probability of price changes in $ per ounce for the day to follow:

Price change ($)               Probability

-4                                             0.05

-2                                             0.10

No change                               0.20

+2                                            0.25

+4                                            0.30

+6                                            0.10

On the other hand, if gold prices reduces on a given day, the next day's distribution of price changes in $ per ounce is:

Price change ($)                          Probability

-6                                                        0.10

-4                                                         0.30

-2                                                         0.25

No change                                           0.15

+2                                                        0.20

Test the policy of buying 100 ounces when prices drop for the preceeding three days and selling 100 ounces when prices rise for the preceding three days.

Simulate for thirty days. Assume at the start that mr. hoper has 1000 ounce of gold for which he has paid $300 per ounce. Determine how much gold will he own at the end of thirty days, as well as his net profit/loss position during this period. Assume at the start that gold is selling at $300 per ounce and that during the day before start of simulation, gold prices rose.


Related Discussions:- Estimates the probabilities of price changes

Other ways to aid learning maths, OTHER WAYS TO AID LEARNING :  Here we sh...

OTHER WAYS TO AID LEARNING :  Here we shall pay particular attention to the need for repetition, learning from other children, and utilising errors for learning.

Trignometric function, If tanx+secx=sqr rt 3, 0 Ans) sec 2 x=(√3-tanx) 2...

If tanx+secx=sqr rt 3, 0 Ans) sec 2 x=(√3-tanx) 2 1+tan 2 x=3+tan 2 x-2√3tanx 2√3tanx=2 tanx=1/√3 x=30degree

Fractions Word Problem, 1/8 of the passengers of a train were children.If t...

1/8 of the passengers of a train were children.If there were 40 children travelling in the train on a certain day,how many adults were there in that train that day?

Subsets of real numbers, is it true or false that all whole numbers are rat...

is it true or false that all whole numbers are rational numbers

Find the probability, A bag contains 19 tickets, numbered from 1 to 19. A t...

A bag contains 19 tickets, numbered from 1 to 19. A ticket is drawn and then another ticket is drawn without replacement .Find the probability that both tickets will show even numb

Find how much women prefer a job outside of the home, According to a Gallup...

According to a Gallup poll 51% of US women prefer to have a job outside of the home. What is the chance that a survey of 200 women would find that 45% or less of the respondants

Evaluate distance traveled by train, Evaluate distance traveled by train: ...

Evaluate distance traveled by train: A plane flying at 525 miles per hour completes a trip in 2 hours less than another plane flying at 350 miles per hour.  What is the distan

The sum of two integers is 36 what is the smaller number, The sum of two in...

The sum of two integers is 36, and the difference is 6. What is the smaller of the two numbers? Let x = the ?rst integer and let y = the second integer. The equation for the su

Find the value of the derivative, Given y = f(x) = x 2 + 2x +3 a) Use the ...

Given y = f(x) = x 2 + 2x +3 a) Use the definitional formula given below to find the derivative of the function. b) Find the value of the derivative at x = 3.

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd