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Homework Help: Probability of selling a stock higher than you bought it

  1. Aug 21, 2010 #1
    1. The problem statement, all variables and given/known data
    I buy a stock at Apple Inc. History shows that the average daily stock price is $297 with a variance of $5. If I buy a stock at $300, what is the probability that after 10 years I will be able to sell the stock at at least that price?


    2. Relevant equations



    3. The attempt at a solution

    I know of one way to solve this problem: Gaussian distribution. I know that I can calculate the probability of $300, $301, $302,...$n with a simple equation. I just want to know if there is another way of doing it.
     
  2. jcsd
  3. Aug 22, 2010 #2

    HallsofIvy

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    Science Advisor

    Yes, use Gaussian distribution. But why calcuate "$300, $301, $302, ..." separately? Any good table of the normal distribution will give you the probability that "x> 300" directly. What did you get for the "standard normal" variable for x= 300?

    (Since you are using the "historic" values, the "10 years" you owned the stock is irrelevant.)
     
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