How can we use normal distribution for finding the probability of a stock price offer where current price offer depends upon the last price offer. The price offer on some day can go 10% above (at the maximum) or 10% below (at the minimum) from the last price offer. If NOT, which is the suitable distribution for the stated problem?
closed as unclear what you're asking by emcor, Bob Jansen♦ Dec 28 '14 at 10:33
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Stock prices have been modeled using the Lognormal distribution, not the Normal distribution. See this paper http://math.ucsd.edu/~msharpe/stockgrowth.pdf for more detailed information.
This does not mean that the current price offer depends on the last price offer.