BACKGROUND You are a stock day trader and investing in four stocks (A, B, C, and D) for only one day. The purchase prices and the historical price standard deviations are as follows: Stock A: Purchase Price = $20.00, Standard Deviation = 15.4 Stock B: Purchase Price = $22.00, Standard Deviation = 18.7 Stock C: Purchase Price = $25.00, Standard Deviation = 20.5 Stock D: Purchase Price = $30.00, Standard Deviation = 25.4 You have purchased 100 shares of each of the four stocks at the prices shown above, and you will sell them at the end of the same day. The stock prices will change in accordance with the standard deviations. You will realize a total profit(loss) for your 1-day trading effort. PROBLEM What is your expected total profit(loss)? Use the Monte Carlo method with 10,000 simulations in Excel and conduct 5 separate runs. Average the 5 separate runs to anticipate your total profit(loss). Create an Excel spreadsheet for the above analysis and submit the spreadsheet with all steps shown and all the data properly labeled. HINT Create 10,000 simulations for all the four stocks, compute the profit(loss) for each, obtain 5 different runs using the F9-key (fn+F9 in Mac), and record the total profit(loss) in each run. Average the profit(loss) of the 5 runs to find the answer. BACKGROUND You are a stock day trader and investing in four stocks (A, B, C, and D) for only one day. The purchase prices and the historical price standard deviations are as follows: Stock A: Purchase Price = $20.00, Standard Deviation = 15.4 Stock B: Purchase Price = $22.00, Standard Deviation = 18.7 Stock C: Purchase Price = $25.00, Standard Deviation = 20.5 Stock D: Purchase Price = $30.00, Standard Deviation = 25.4 You have purchased 100 shares of each of the four stocks at the prices shown above, and you will sell them at the end of the same day. The stock prices will change in accordance with the standard deviations. You will realize a total profit(loss) for your 1-day trading effort. PROBLEM What is your expected total profit(loss)? Use the Monte Carlo method with 10,000 simulations in Excel and conduct 5 separate runs. Average the 5 separate runs to anticipate your total profit(loss). Create an Excel spreadsheet for the above analysis and submit the spreadsheet with all steps shown and all the data properly labeled. HINT Create 10,000 simulations for all the four stocks, compute the profit(loss) for each, obtain 5 different runs using the F9-key (fn+F9 in Mac), and record the total profit(loss) in each run. Average the profit(loss) of the 5 runs to find the
