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

Calculate the probability, Given the following decision tree, perform the t...

Given the following decision tree, perform the tasks listed below  1. Simulate the route through the test market and produce results for twenty simulations, calculating the

What does required to earn on his further science test in 93, Justin earned...

Justin earned scores of 85, 92, and 95 on his science tests. What does he required to earn on his further science test to have an average (arithmetic mean) of 93%? To earn an a

Determinarte, what is the differeance in between determinate and matrix .

what is the differeance in between determinate and matrix .

Which team should get the ball at the beginning, Why is tossing a coin cons...

Why is tossing a coin considered to be a fair way of deciding which team should get the ball at the beginning of a foot ball match? Ans: equally likely because they are mutual

Compute the derivative, Write an octave program that will take a set of poi...

Write an octave program that will take a set of points {x k , f k } representing a function and compute the derivative at the same points x k using 1. 2-point forward di erence

HELP, WHAT TWO SIX DIDGIT NUMBERS CAN YOU ADD 984,357

WHAT TWO SIX DIDGIT NUMBERS CAN YOU ADD 984,357

Scalar multiplication - vector arithmetic, Scalar Multiplication - Vector a...

Scalar Multiplication - Vector arithmetic Another arithmetic operation that we wish to look at is scalar multiplication. Specified the vector a → = (a 1 , a 2 , a 3 ) and any

Example of operational stages in learning maths, Children of the same age c...

Children of the same age can be at different operational stages, and children of different ages, can be at the same developmental stage." Do you agree with this statement? If so, g

Create a circular table with no restrictions, 1. Four different written dri...

1. Four different written driving tests are administered by a city. One of these tests is selected at random for each applicant for a drivers license. If a group of 2 women and 4 m

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