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

Prove that the height of the center of the balloon, A round balloon of radi...

A round balloon of radius 'a' subtends an angle θ at the eye of the observer while the angle of elevation of its centre is Φ.Prove that the height of the center of the balloon is a

Expressing the interest rate as a decimal fraction, Total Contribution per ...

Total Contribution per Year for next 10yeras =$1000+$800 =$1800 So Total Future fund Vaule  =$1800*(1+1.073+power(1.073,2)+ power(1.073,2)+ power(1.073,3)+ power(1.073,4)+ power

Multiplication of two matrices, Need assignment help, Explain Multiplicatio...

Need assignment help, Explain Multiplication of two Matrices.

Solve 9 sin ( 2 x )= -5 cos(2x ) on[-10, Solve 9 sin ( 2 x )= -5 cos(2x ) o...

Solve 9 sin ( 2 x )= -5 cos(2x ) on[-10,0]. Solution At first glance this problem appears to be at odds with the sentence preceding the example. However, it really isn't.

Triangle inequalities, poa is a straight line in circle,wher o is center of...

poa is a straight line in circle,wher o is center of circle,b is any pointjoined with p.prove that pa>pb

Explain why f must be a di?erentiable function, Let f : R 3 → R be de?ned ...

Let f : R 3 → R be de?ned by:                                        f(x, y, z) = xy 2 + x 3 z 4 + y 5 z 6 a) Compute ~ ∇f(x, y, z) , and evaluate ~ ∇f(2, 1, 1) . b) Brie?y

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