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

How many pages are not advertisements, The first section of a newspaper has...

The first section of a newspaper has 16 pages. Advertisements take up (3)3/8 of the pages. How many pages are not advertisements? Subtract the number of pages of advertisements

Method to solve binomials of second degree, In this part we look at a...

In this part we look at another method to obtain the factors of an expression. In the above you have seen that x 2 - 4x + 4 = (x - 2) 2 or (x - 2)(x - 2). If yo

Spring force, Spring, F s We are going to suppose that Hooke's Law wil...

Spring, F s We are going to suppose that Hooke's Law will govern the force as the spring exerts on the object. This force will all the time be present suitably and is F s

Marketing management , #How are Indian customers visiting Shoppers’ Stop an...

#How are Indian customers visiting Shoppers’ Stop any different from customers of developed western countries?

Shares and dividend, a man in rested rupee 800 is buying rupee 5 shares and...

a man in rested rupee 800 is buying rupee 5 shares and then are selling at premium of rupee 1.15. He sells all the shares.find profit

SHOPPERS`STOP, 3. How are Indian customers visiting Shoppers’ Stop any diff...

3. How are Indian customers visiting Shoppers’ Stop any different from customers of developed western countries? 4. How should Shoppers’ Stop develop its demand forecasts?

Write down those features of such interactions, After seeing some children ...

After seeing some children interacting naturally, write down those features of such interactions that make peer learning potentially a better way of learning. Another point that

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