Question
One theory about the daily changes in the closing price of a stock is that these changes follow a random walk - that is, these
One theory about the daily changes in the closing price of a stock is that these changes follow a random walk - that is, these daily events are independent of each other and move upward or downward in a random manner - and can be approximated by a normal distribution. To test this theory, collect the closing prices of stocks from for your favorite company or brand. You can find this by going to finance.yahoo.com and searching for "YourCompany stock history".
1. Choose your favorite company or brand and search finance.yahoo.com with that company name and "historical stock prices". Download the stock history for this company for the past 6 weeks by selecting the appropriate dates and clicking on "Download to Spreadsheet" at the bottom of page.
2. Calculate the daily change in the closing stock prices by taking the difference between the closing and opening price for the day. This is the daily stock change.
3. Run the Descriptive Statistics->Summary Table in Excel Data Analysis on the daily stock change. Share the summary table.
4. Calculate the 1st and 3rd quartiles of the daily stock change. Share these along with the min, median and max from 3) as your 5-Number Summary.
5. Create a Box & Whiskers Plot using your 5-Number Summary.
5. Is your daily stock change distribution right skewed (median < mean), left skewed (mean < median), or symmetric (mean median)? Would you consider your daily stock change to be normally distributed? Why or Why Not?
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