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

Climate and vegetation of southeast asia, 1.) How does the monsoon influenc...

1.) How does the monsoon influence the climate and vegetation of Southeast Asia? 2.) What is the main crop in Southeast Asia and the main systems by which it is produce? How and

Definition and fact of the shape of a graph, Definition 1.   Given any ...

Definition 1.   Given any x 1  & x 2   from an interval  I with x 1 2  if f ( x 1 ) 2 ) then f ( x ) is increasing on I. 2.   Given any x 1  & x 2  from an interval

Transportation problem, matlab code for transportation problem solved by vo...

matlab code for transportation problem solved by vogel''s approximation method

Solution by factorization, Solution by Factorization, please solve quadrati...

Solution by Factorization, please solve quadratic equations by Factorization.

Equal groupings -categories of multiplication, Equal groupings - when we...

Equal groupings - when we want to find how many objects there are in several equal-sized sets. (e.g., if there are 3 baskets, each with 4 bananas, 4 oranges and 4 apples, respec

Using euclid''s algorithm find the value of x & y, If d is the HCF of 30, 7...

If d is the HCF of 30, 72, find the value of x & y satisfying d = 30x + 72y. (Ans:5, -2 (Not unique) Ans:    Using Euclid's algorithm, the HCF (30, 72) 72 = 30 × 2 + 12

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

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

Multiply, 37x7= multiply answer it.

37x7= multiply answer it.

Area and perimeter, if perimeter is 300m length is 100m.find the breadth

if perimeter is 300m length is 100m.find the breadth

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