Stock at the end of the first year is normally distributed

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Reference no: EM131552458

You buy a stock today for $19. The price of the stock at the end of the first year is normally distributed with a mean of 19+3.48 and a standard deviation of 4. The stock price at the end of each year depends on the stock price at the beginning of the year. If the stock price at the end of the first year is $X (which is random), then the price of the stock at the end of the second year is normally distributed with a mean of X+3.48 and a standard deviation of 4. If the stock price at the end of the second year is $Y (which is random), then the price of the stock at the end of the third year is normally distributed with a mean of Y+3.48 and a standard deviation of 4. Use SIPMath with 100000 trials to calculate the probability that the stock price at the end of the third year will be less than $19. Express your answer as a probability between 0 and 1."

Reference no: EM131552458

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