The daily changes in the closing price of stock follow a random walk. That is, these...

The daily changes in the closing price of stock follow a random walk. That is, these daily events are independent of each other and move upward or downward in a random matter and can be approximated by a normal distribution. Let's test this theory. Use either a newspaper, or the Internet to select one company traded on the NYSE. Record the daily closing stock price of your company for the six past consecutive weeks (so that you have 30 values). Decide whether the your 2 data sets are normally distributed by creating a histogram or a boxplot. Please attach your histogram or boxplot as a Word document in your post. Please do NOT answer the discussion in your attachment; answer on the discussion board. Discuss your results. What can you say about the stock with respect to daily closing prices and daily changes in closing prices. Which, if any, of the data sets are approximately normally distributed? NYSE - GE Date Closing Stock Price 1/2/19 8.05 1/3/19 8.06 1/4/19 8.23 1/7/19 8.74 1/8/19 8.56 1/9/19 8.5 1/10/19 8.94 1/11/19 8.94 1/14/19 8.9 1/15/19 8.73 1/16/19 8.98 1/17/19 9.14 1/18/19 9.06 1/22/19 8.66 1/23/19 8.73 1/24/19 8.78 1/25/19 9.16 1/28/19 8.93 1/29/19 8.9 1/30/19 9.1 1/31/19 10.16 2/1/19 10.19 2/2/19 10.21 2/3/19 10.63 2/4/19 10.47 2/5/19 10.06 2/6/19 9.81 2/7/19 10.03 2/8/19 9.81 2/12/19 10.31 Sample Size 30 Mean Median Standard Deviation Minimum Maximum

Solutions

Expert Solution

We have to select the two data sets for the closing stock prices for the company traded on the NYSE. Then we have to create the histograms for these datasets to check whether the given two datasets are normally distributed or not. The histograms for the Closing stock prices and daily changes are given as below:

No any one of the histogram above shows that the data is distributed normally or approximately normally. Actually, the given sample size is less or not adequate to test the normality properly. For the large sample sizes, we get more reliable results for checking the normality of the data.

orchestra answered 1 year ago

Next > < Previous

Related Solutions

The statement that stock prices do NOT follow a random walk implies that (I) successive price...

The statement that stock prices do NOT follow a random walk implies that (I) successive price changes are independent of each other; (II) successive price changes are positively related; (III) successive price changes are negatively related; (IV) the autocorrelation coefficient is zero (I) and (IV) only (II) or (III) (III) only (II) only (I) only

The random walk model suggests that day-to-day changes in the price of a stock should have...

The random walk model suggests that day-to-day changes in the price of a stock should have a mean value of zero, how do you test the random walk hypothesis?

The random walk model suggests that day-to-day changes in the price of a stock should have...

The random walk model suggests that day-to-day changes in the price of a stock should have a mean value of zero, how do you test the random walk hypothesis?

The random walk model suggests that day-to-day changes in the price of a stock should have...

The random walk model suggests that day-to-day changes in the price of a stock should have a mean value of zero, how do you test the random walk hypothesis?

For 300 trading days, the daily closing price of a stock (in $) is well modeled...

For 300 trading days, the daily closing price of a stock (in $) is well modeled by a Normal model with mean $196.55 and standard deviation $7.17. According to this model, what cutoff value of price would separate the a) lowest 17% of the days? b) highest 0.78%? c) middle 61%? d) highest 50%?

For 300 trading days, the daily closing price of a stock (in $) is well modeled...

For 300 trading days, the daily closing price of a stock (in $) is well modeled by a Normal model with mean $196.59 and standard deviation $7.14 According to this model, what is the probability that on a randomly selected day in this period the stock price closed as follows. a) above $203.73? b) below $210.87? c) between $182.31 and $210.87 d) Which would be more unusual, a day on which the stock price closed above $210 or below $190

For 300 trading days, the daily closing price of a stock (in $) is well modeled...

For 300 trading days, the daily closing price of a stock (in $) is well modeled by a Normal model with mean $196.59 and standard deviation $7.16. According to this model, what cutoff value of price would separate the a) lowest 14% of the days? b) highest 0.42%? c) middle 63%? d) highest 50%?

For 300 trading days, the daily closing price of a stock (in $) is well modeled...

For 300 trading days, the daily closing price of a stock (in $) is well modeled by a Normal model with mean $195.61 and standard deviation $7.15. According to this model, what cutoff value of price would separate the a) lowest 11% of the days? b) highest 0.86%? c) middle 58%? d) highest 50%?

For 300 trading days, the daily closing price of a stock (in $) is well modeled...

For 300 trading days, the daily closing price of a stock (in $) is well modeled by a Normal model with mean $197.89 and standard deviation $7.17. According to this model, what is the probability that on a randomly selected day in this period the stock price closed as follows. a) above $205.06? b) below $212.23? c) between $183.55 and $212.23? d) Which would be more unusual, a day on which the stock price closed above $210 or below $180?

For 300 trading days, the daily closing price of a stock (in $) is well modeled...

For 300 trading days, the daily closing price of a stock (in $) is well modeled by a Normal model with mean $197.38 and standard deviation $7.16 According to this model, what cutoff value of price would separate the a) lowest 13% of the days? b) highest 0.62%? c) middle 79%? d) highest 50%? Select the correct answer below and fill in the answer box(es) within your choice. A.The cutoff points are nothing and nothing. (Use ascending order. Round to...

Subjects