(45%) You wish to predict the future stock price of Stark Industries (STRK) to develop a trading strategy. One way to model stock prices (in a "normal" market) is to use Brownian Motion. In this model, each day’s price is estimated using the previous day’s price plus a random amount. For this problem, we will be adding a random number coming from a normal distribution. For the distribution, the standard deviation will be 0.5% of the previous day’s price and the mean will be ±0.1% of the previous day’s price. The mean will be positive if the price one day before is higher than the price two days before, and negative otherwise. For example, to estimate the price for day three, add a random number to the price on day two. The mean and standard deviation of this random number is calculated using the stock price on day two and the trend in price from day one to day two.

Uppose that the federal reserve purchases a bond for $100,000 from donald truck, who deposits the proceeds in the manufacturer’s national bank. what will be the impact of this purchase on the supply of money? the money supply will increase by $100,000. the money supply will increase by $80,000. the money supply will increase by $500,000. this action will have no effect on the money supply. if the reserve requirement ratio is 20 percent, what is the maximum amount of additional loans that the manufacturer’s bank will be able to extend as the result of truck’s deposit? the maximum additional loans is $100,000. the maximum additional loans is $80,000. the maximum additional loans is $20,000. the maximum additional loans is $500,000. given the 20 percent reserve requirement, what is the maximum increase in the quantity of checkable deposits that could result throughout the entire banking system because of the fed’s action? this action will have no effect on the money supply. the money supply will eventually increase by $80,000. the money supply will eventually increase by $500,000. the money supply will eventually increase by $100,000.