# 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.

https://brainmass.com/statistics/normal-distribution/random-walk-theory-normal-distribution-82242

#### 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.