Distribution of Returns

  • How are stock prices distributed?
  • How are stock returns distributed?
  • Is it necessary to differentiate between the two?

AAPL Stock Price

## [1] "AAPL"

Distribution of Prices

Distribution of Returns

Histogram for Returns for AAPL

Assume Stock Prices are Normally Distributed

## Average Return    St. Dev Ret 
##          0.024          0.081

Approximate Distribution