Stochastic Finance Assignment Example | Topics and Well Written Essays - 2500 words

Stochastic Finance - Assignment Example(a). Using Yahoo finance I settled on triple companies AAC Holdings, Inc., 1347 Capital Corp. and Alexco Resource Corp traded at NYSE, NASQAD and AMEX respectively and obtained daily closing bank line prices for apiece company for six consecutive weeks commencing 13th April 2015 to twenty-second May 2015. (see excel calculations)(b). The table in the appendix 1 also shows the results of the calculation for the logarithmic daily changes in the closing stock price for each of the three companies for six consecutive weeks. The formulaThe curve shown in the graph above clearly indicates the performance in the stock markets. The daily closing stock prices for AAC Holdings, Inc, a company in the NYSE markets tends to be stable by showing a regular trend in evolution over the source few weeks. The growth rate however slows down in the last weeks.As compared to the scenario in AAC Holdings, Inc, the trend here is a steady upward growth till the en d. This pattern in growth however cannot be reliably adopted to predict the future state of the stock price for 1347 Capital corp. Investors without proper(a) analysis can easily be lured to invest in such stocks since they promise high level of returns in a short time scarce can also drop in value drastically.Alexco Resource Corp though in a different stock market (AMEX) has the lowest stock prices with an average of$ 0.41. At this price Investors are attracted to invest but only when the trend in growth is consistent. This eluding proves the same as the stock prices financial support on going up for the entire six week period.Inflation weakens the value of the local currency against the foreign currency in other delivery foreign exchange (Ross, S. 2003). A general rise in prices for most of the products means that the input prices for production of various goods and services are rising. In this case market analysts and fund managers will always consider the net impact on the m argin of the entity that they are tracking.Sometimes