Suppose you have analyzed the price behavior of a certain stock by plotting the scaled frequency histogram
Question:
Suppose you have analyzed the price behavior of a certain stock by plotting the scaled frequency histogram of the price over a number of months. Suppose that the histogram indicates that the price is normally distributed with a mean $100 and a standard deviation of $5. Write a MATLAB program to simulate the effects of buying 50 shares of this stock whenever the price is below the $100 mean, and selling all your shares whenever the price is above $105. Analyze the outcome of this strategy over 250 days (the approximate number of business days in a year). Define the profit as the yearly income from selling stock plus the value of the stocks you own at year’s end, minus the yearly cost of buying stock. Compute the mean yearly profit you would expect to make, the minimum expected yearly profit, the maximum expected yearly profit, and the standard deviation of the yearly profit. The broker charges 6 cents per share bought or sold with a minimum fee of $40 per transaction. Assume you make only one transaction per day.
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