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

Functions, find the domain of the function f(x) = (| sin inverse sin x | - ...

find the domain of the function f(x) = (| sin inverse sin x | - cos inverse cos x) ^ 1/2

Apply depth-first-search to find out the spanning tree, Apply depth-first-s...

Apply depth-first-search to find out the spanning tree for the subsequent graph with vertex d as the starting vertex.        Ans: Let us begin with node'd'. Mark d as vi

Ellipse, How we find locus of the middle points of chord of an ellipse whic...

How we find locus of the middle points of chord of an ellipse which are drawn through the positive end of the minor axes

LINEAR PROGRAMMING, Richland Health has three hospitals in the greater Tamp...

Richland Health has three hospitals in the greater Tampa, Florida area. Demand for patient services varies considerably during the fall and winter months due to the temporary influ

Eometyr, Lines EF and GH are graphed on this coordinate plane. Which point ...

Lines EF and GH are graphed on this coordinate plane. Which point is the intersection of lines EF and GH?

Circle, prove that - there is one and only one circle passing through three...

prove that - there is one and only one circle passing through three non - collinear points

Craig D, i need help in discrete mathematics on sets, relations, and functi...

i need help in discrete mathematics on sets, relations, and functions.

School mathematics, I am interested in school mathematics online assignment...

I am interested in school mathematics online assignments , homework help, projects etc. I have good knowledge of mathematics and experience of 15+ years teaching mathematics in cen

#title.automotive cruise control system., What are some of the interestingm...

What are some of the interestingmodern developments in cruise control systems that contrast with comparatively basic old systems

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