The stock price of Robin Tires, Inc., listed on the Stock Exchange is currently $20. The following probability distribution shows how the price per share is expected to change over a three-month period:
?
Stock Profit Change ($)
Probability
-3
0.25
-2
0.2
-1
0.05
0
0.15
+1
0.1
+2
0.15
+3
0.1
?
a. Construct a spreadsheet simulation model that computes the value of the stock profit in 3 months, 6 months, 9 months, and 12 months under the assumption that the change in profit over any 3-month period is independent of the change in profit over any other 3-month period.b. With the current profit of $20 per share, simulate the profit per share for the next four 3-month periods. What is the average profit in 12 months? What is the standard deviation of the profit in 12 months?
What will be an ideal response?
b. The mean stock profit after 12 months is $18 and the standard deviation is $4.20.
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What will be an ideal response?
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