Stock Price Movement Probability 45 Increase Same .30 Decrease .25 The analyst has also developed the following probability distributions for the amount of the increases or decreases in the stock price per day: Probability Stock Price Change Increase 40 Decrease .12 .17 .15 .12 .18 .10 .21 .08 .14 .07 .10 .04 .05 1 .02 .05 The price of the stock is currently 62. Develop a Monte Carlo simulation model to track the stock price of Compcomm stock and simulate for 30 days. Indicate the new stock price at the end of the 30 days. How would this model be expanded to conduct a complete sim- ulation of one year's stock price movement?

Stock Price Movement Probability 45 Increase Same .30 Decrease .25 The analyst has also developed the following probability distributions for the amount of the increases or decreases in the stock price per day: Probability Stock Price Change Increase 40 Decrease .12 .17 .15 .12 .18 .10 .21 .08 .14 .07 .10 .04 .05 1 .02 .05 The price of the stock is currently 62. Develop a Monte Carlo simulation model to track the stock price of Compcomm stock and simulate for 30 days. Indicate the new stock price at the end of the 30 days. How would this model be expanded to conduct a complete sim- ulation of one year's stock price movement?

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter9: Decision Making Under Uncertainty

Section9.4: The Precision Tree Add-in

Problem 9P

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The University of Miami bookstore stocks textbooks in preparation for sales each semester. It normally relies on departmental forecasts and preregistration records to determine how many copies of a text are needed. Preregistration shows 85 operations management students enrolled, but bookstore manager Vaidy Jayaraman has second thoughts, based on his intuition and some historical evidence. Vaidy believes that the distribution of sales may range from 65 to 85 units, according to the following probability model: Demand Probability 65 0.05 Stock 65 70 75 80 85 70 0.25 This textbook costs the bookstore $82 and sells for $107. Any unsold copies can be returned to the publisher, less a restocking fee and shipping, for a net refund of $30. a) Based on the given information, Vaidy's conditional profits table for the bookstore is: Demand 75 P=0.30 65 P = 0.05 0000 70 P = 0.25 75 0.30 ☐☐☐☐ 80 0.15 00000 80 85 P = 0.15 P = 0.25 30000 85 0.25 ☐☐☐☐
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