Posted: November 17th, 2022

# Daily changes in the closing price of stock

6.54 (Class Project) According to Burton G. Malkiel, the daily changes in the closing price of stock 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, use either a newspaper or the Internet to select one company traded on the NYSE, one company traded on the American Stock Exchange, and one company traded on the NASDAQ and then do the following: 1. Record the daily closing stock price of each of these companies for six consecutive weeks (so that you have 30 values per company). 2. Record the daily changes in the closing stock price of each of these companies for six consecutive weeks (so that you have 30 values per company). For each of your six data sets, decide whether the data are approximately normally distributed by a. constructing the stem-and-leaf display, histogram or polygon, and boxplot. b. comparing data characteristics to theoretical properties. c. constructing a normal probability plot. d. Discuss the results of (a) through (c). What can you say about your three stocks with respect to daily closing prices and daily changes in closing prices? Which, if any, of the data sets are approximately normally distributed?

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