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    Use NORMSINV(RAND()) to generate spreadsheet

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    Financial analysts often use the following model to characterize changes in stock prices:

    Pt = Po*e^(u-0.5s^2)t+s*Z*t^0.5

    where Po = current stock price
    Pt - price at time t
    u - mean (logarithmic) change of the stock price per unit time
    s = (logarithmic) standard deviation of price change
    Z = standard normal random variable

    This model assumes that the logarithm of a stock's price is a normally distributed random variable. Using historical data, one can estimate the values for u and s. Suppose that the average daily change for a stock is $0.003227, and the standard deviation is 0.026154. Develop a spreadsheet to stimulate the price of the stock over the next 30 days, if the current price is $53. Use the Excel function NORMSINV(RAND()) to generate values for Z. Construct a chart showing the movement in the stock price.

    See attached file.

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