Simulate the stock prices for the next year

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Question: After you sold the land, you plan to invest in stock market with the money you got. First, you picked a stock you are very interested in. You would like to simulate future daily prices of this stock for the next calendar year. In order to simulate prices, you need expected return and annualized volatilities, so you decide to calculate the annual expected return for this stock using CAPM, and you measure the annualized volatility using this stock's historical 1-year daily holding period returns. In the end, you will simulate the stock prices for the next year, the certain component and certain component of each price. A graph with these 3 series of prices will also be plotted.

Reference no: EM131933981

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