Business, 18.06.2020 05:57, bubbleslol4463

(45%) You wish to predict the future stock price of Stark Industries (STRK) to develop a trading strategy. One way to model stock prices (in a "normal" market) is to use Brownian Motion. In this model, each day’s price is estimated using the previous day’s price plus a random amount. For this problem, we will be adding a random number coming from a normal distribution. For the distribution, the standard deviation will be 0.5% of the previous day’s price and the mean will be ±0.1% of the previous day’s price. The mean will be positive if the price one day before is higher than the price two days before, and negative otherwise. For example, to estimate the price for day three, add a random number to the price on day two. The mean and standard deviation of this random number is calculated using the stock price on day two and the trend in price from day one to day two.

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(45%) You wish to predict the future stock price of Stark Industries (STRK) to develop a trading str...