Problems 13
1. The price of share of particular stock listed on the New York stock Exchange is
currently $39. The following probability distribution shows how the price per share is
expected to change over a three-month period.
Stock Price Change ($)
Probability
-2
0.05
-1
0.10
0
0.25
+1
0.20
+2
0.20
+3
0.10
+4
0.10
a. Set up intervals of random numbers that can be used to generate the change in
stock price over a three-month period
b. With the current price of $39 per share and the random number 0.1091, 0.9407,
0.1941, and 0.8083, simulate the price per share for the next four 3-month
periods. What the ending simulated price per share
2. A Project has four activity (A,B,C, and D) that must be performed sequentially. The
probability distribution for the time required to complete each of the activities are as
follows:
Activity
Activity Time Probability
(weeks)
A
5
025
6
035
7
025
8
015
B
3
5
7
020
055
025
C
10
12
14
16
18
010
025
040
020
005
D
8
10
060
040
a. Provide the best case, worst case, and best case calculations for the time to
complete the project.
b. Use the random number o.1778, 0.9617, 0.6849, and 0.4503 to simulate the
completion time of the project in week
c. Discuss how simulation could be used to estimate the probability the project can
be completed in 35 weeks or less.