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

ConnectEd, How do I increase and decrease tax and sales

How do I increase and decrease tax and sales

GRAPH, HOW CAN WE TAKE SUPPOSE THE VALUES OF X AND Y

HOW CAN WE TAKE SUPPOSE THE VALUES OF X AND Y

Share and dividend, i want to get market value of 10 popular shares of all ...

i want to get market value of 10 popular shares of all working days in a week

Pre-calculus, Give all solutions between o degree and 360 degree for sin x=...

Give all solutions between o degree and 360 degree for sin x=3/2

Terminology of polynomial, Terminology of polynomial Next we need to ge...

Terminology of polynomial Next we need to get some terminology out of the way. Monomial polynomial A monomial is a polynomial which consists of exactly one term.

Solution of rectilinear figures, A straight line AB on the side of a hill i...

A straight line AB on the side of a hill is inclined at 15.0° to the horizontal. The axis of a tunnel 486ft. long is inclined 28.6° below the horizontal lies in a vertical plane wi

Integraton, how to find area under a curve

how to find area under a curve

Differential equations, Find the normalized differential equation which has...

Find the normalized differential equation which has {x, xex} as its fundamental set

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