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Random walk theory and normal distribution

Attached is the daily closing price of the stock (xmsr).
Decide whether the data appears to be normally distributed by:

1. record the daily changes in the closing stock price of each day.

a. make a stem and leaf display, histogram or polygon, and box and whisker plot.

b. evaluate the actual versus theoretical properties.

c. construct a normal probability plot.

d. discuss the results. of a,b, and c.

note* the random walk theory pertains to the daily changes in the closing stock price, not the daily closing stock price.

e. based on the conclusions in d what can you now say about your distribution of each type- the daily closing prices and daily changes in closing prices? Which if any of the data sets appear to be approximately normally distributed?

Part 2

Use the following:

a. closing price and previous closing price
b. daily change and previous day change

1. to make a scatter plot of the 2 data sets
2. complete the regression coefficient of the 2 data sets
3. run a regression for both and interpret it.


Solution Summary

The solution analyzes closing price data on stocks and discusses its normality as well as the relevance of the data to random walk theory.