Project #29604 - Stats HW

1.   Financial analysts often use the following model to


characterize changes in stock prices:


Pt = P0




1m- 0.5s




2t +sZ2t




P0  =   current stock price 


Pt  =    price at time  t


m   =    mean (logarithmic) change of the stock price


per unit time 


s =    (logarithmic) standard deviation of price




Z =    standard normal random variable  


   This model assumes that the logarithm of a stock’s price


is a normally distributed random variable (see the discussion of the lognormal distribution and note that the


first term of the exponent is the mean of the lognormal


distribution). Using historical data, one can estimate values for    m    and    s.    Suppose that the average daily change


for a stock is $0.003227, and the standard deviation is


0.026154. Develop a spreadsheet to simulate the price


of the stock over the next 30 days, if the current price


is $53. Use the Excel function NORMSINV(RAND( ))


to generate values for Z. Construct a chart showing the


movement in the stock price.





6.   Using the generic profit model developed in the section  Logic and Business Principles  in  Chapter   9   , develop a financial simulation model for a new product proposal and construct a distribution of profits under the following assumptions: Price is fixed at $1,000. Unit costs are
unknown and follow the distribution.
Description: MAC:Users:USER:Pictures:Screen Shot 2014-05-01 at 1.13.38 PM.png




Implement your model using  Crystal Ball  to determine


the best production quantity to maximize the average


profit. Would you conclude that this product is a good


investment? (Data for this problem can be found in the


Problem 6  worksheet in the Excel file   Chapter   10    Problem


Data. )




7.   The manager of the apartment complex in Problem 9


of  Chapter   9    believes that the number of units rented


during any given month has a triangular distribution


with minimum 30, most likely 34, and maximum 40.


Operating costs follow a normal distribution with mean


$15,000 and a standard deviation of $300. Use  Crystal


Ball  to estimate the 80%, 90%, and 95% confidence intervals for the profitability of this business.


 a.   What is the probability that monthly profit will be




 b.   What is the probability that monthly profit will


exceed $4,000?


 c.   Compare the 80%, 90%, and 95% certainty ranges. 


 d.   What is the probability that profit will be between


$1,000 and $3,000?






8.   Develop a  Crystal Ball  model for the garage band in


Problem 11 in  Chapter   9    with the following assumptions. The expected crowd is normally distributed with


a mean of 3,000 and a standard deviation of 400 (minimum of 0). The average expenditure on concessions


is also normally distributed with mean $15, standard


deviation $3, and minimum 0. Identify the mean profit,


the minimum observed profit, maximum observed


profit, and the probability of achieving a positive profit.


Develop and interpret a confidence interval for the


mean profit for a 5,000-trial simulation.


Subject General
Due By (Pacific Time) 05/01/2014 11:00 pm
Report DMCA

Chat Now!

out of 1971 reviews

Chat Now!

out of 766 reviews

Chat Now!

out of 1164 reviews

Chat Now!

out of 721 reviews

Chat Now!

out of 1600 reviews

Chat Now!

out of 770 reviews

Chat Now!

out of 766 reviews

Chat Now!

out of 680 reviews
All Rights Reserved. Copyright by - Copyright Policy