Probability of selling a stock higher than you bought it

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In summary, the conversation discusses using Gaussian distribution to calculate the probability of selling a stock at a certain price, and suggests using a table of the normal distribution to find the probability directly rather than calculating each individual price. It also mentions that the time period of owning the stock is irrelevant for this calculation.
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moonman239
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Homework Statement


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?


Homework Equations





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.
 
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  • #2
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.)
 

What is the probability of selling a stock higher than you bought it?

The probability of selling a stock higher than you bought it depends on many factors, such as the current market conditions, the performance of the company, and your own investment strategy. It is not possible to accurately determine the probability without knowing these variables.

How can I increase the probability of selling a stock higher than I bought it?

There are several ways to potentially increase the probability of selling a stock higher than you bought it. These include thorough research and analysis of the company, diversifying your portfolio, and having a long-term investment strategy rather than trying to time the market.

What are some common mistakes that can decrease the probability of selling a stock higher than I bought it?

Some common mistakes that can decrease the probability of selling a stock higher than you bought it include emotional decision making, lack of research and understanding of the company and market, and trying to time the market rather than investing for the long-term.

Is there a way to accurately predict the probability of selling a stock higher than I bought it?

No, there is no way to accurately predict the probability of selling a stock higher than you bought it. The stock market is constantly changing and influenced by many variables, making it impossible to make accurate predictions.

What should I consider when calculating the probability of selling a stock higher than I bought it?

When calculating the probability of selling a stock higher than you bought it, it is important to consider the current market conditions, the performance of the company, your own investment strategy, and any potential risks or uncertainties. It is also important to keep in mind that the probability is not a guarantee and can change at any time.

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