Series and Future Stock Prices

• Illania

The Attempt at a Solution

I am assuming the equation for the first part will have something to do with the compound interest formula, but I'm not sure how to apply it here. I was thinking of something like 1 - .05n, but that doesn't seem quite right to me.

As for the second part of the problem, it is dependent on what I find for the first part, but I think that it has to do with finding the limit of whatever I find to be the answer for the first part of the question.

Any suggestions that will point me in the right direction here?
For the second part, sum over all n:
$$\sum_{n=0}^\infty \frac{1}{1.05^n}$$
That is a "geometric series" of the form $\sum r^n$ with r= 1/1.05.

Hm, I have only seen geometric series of the form $\Sigma$ Arn-1. I understand how to manipulate a term to make a power of n a power of n-1, but the exponent here would be a negative n. Should I instead to be looking at the series as $\sum\left(\frac{1}{1.05}\right)^{n}$ and then manipulate the series to get that power to n-1?

Illania said:
Hm, I have only seen geometric series of the form $\Sigma$ Arn-1. I understand how to manipulate a term to make a power of n a power of n-1, but the exponent here would be a negative n. Should I instead to be looking at the series as $\sum\left(\frac{1}{1.05}\right)^{n}$ and then manipulate the series to get that power to n-1?

What do YOU think?

Question 1: What is a series in relation to stock prices?

A series in relation to stock prices refers to a sequence of data points, typically represented as a graph, that shows the movement of a particular stock's price over a period of time. This can include daily, weekly, monthly, or yearly data points.

Question 2: How are future stock prices predicted using series?

Future stock prices are predicted using series through a process called time series analysis. This involves analyzing past patterns and trends in a stock's price series to make predictions about its future movements. Other factors such as market trends and economic conditions may also be taken into account.

Question 3: What are the main limitations of using series to predict future stock prices?

The main limitations of using series to predict future stock prices include the assumption that past patterns and trends will continue in the future, which may not always be the case. Additionally, unexpected events or changes in the market can greatly impact stock prices and cannot always be predicted through series analysis alone.

Question 4: How accurate are series-based predictions of future stock prices?

The accuracy of series-based predictions of future stock prices can vary depending on various factors such as the data used, the method of analysis, and the current market conditions. While series analysis can provide valuable insights, it is important to consider other factors and make informed decisions when it comes to investing in stocks.

Question 5: Can series be used to predict stock prices for all types of stocks?

Series can be used to predict stock prices for most types of stocks, as long as there is enough data available to analyze. However, certain stocks, such as those of newer companies or those in highly volatile industries, may be more difficult to predict using series analysis alone.

Replies
1
Views
1K
Replies
34
Views
3K
Replies
1
Views
3K
Replies
9
Views
1K
Replies
5
Views
2K
Replies
5
Views
2K
Replies
1
Views
2K
Replies
46
Views
4K
Replies
18
Views
1K
Replies
1
Views
3K