## Sunday, May 1, 2011

### Ch 6 Project by Thanh La

For my Project I chose the IBM stock and I had to find the prices of the products per year for the years: for the years 1994, 1995, 1996, 1997, 1999, 2000, 2001, 2002, 2003, 2004. I went on the Dow index to find the prices for the IBM stock prices at yahoo finance. The prices i found, i then used the prices i found to plug in my calculator corresponding to the years that i was required to research. After i got my data punched in my calculator i did the regression formula to find my polynomial model. I went to Stat: Calc, and chose linear regression, and then did L1 , L2, Vars: y-vars: Y1, and then i pressed enter, i found the correlation coefficient but just in case i repeated the steps but instead of linear regression i did quadratic, cubic, and quartic, and i compared all of the Correlation coefficient and it is found that the Quartic model has the closet correlation coefficient to 1. I chose the quartic polynomial model and found the values of the Y-coordinate that corresponded to the years. I then plugged in the years to check my prices with the quartic model, and it did not match the actual price. I did some research and found out that The actual price slightly dropped in 2002 was because competitions like apple and other computer company started making computer. But the price then went up at 2008 because as prices for other computer company product, the prices for IBM remained low and were good enough to use, so people began to buy IBM again, also that IBM only making computers that time caused it to make more money selling computers while apple were selling things like ipods. For the Dow index i did the same thing for my stock but i got the total money this time. I noticed that the Market index went up until 2003 and it dropped because there was the war in Iraq which caused the Economy to take a big hit, because the U.S. had to pay for defense and offensive mechanisms which caused budget cuts, tax increases, and interests rate to go up, causing less people to buy things. The index cost at year 1999 is \$3486.70. The prices i got from using my quartic model didn't match the actual prices because the market can not be planned to gain or lose, and anything could happen at any time. The world is a gigantic form compared to our calculators, and it would be harder to make a polynomial model to make such accurate guesses. However, it is shown that the stock decreases at 1997-98 while the index increases likely because the index have other companies making them money. The stock and index has had a constant increase from the beginning till now until 2003 it drops likely because of competition. Mathematics modeling on stock market is ineffective
because polynomials go a certain direction with given information and has a certain extent to how accurate it can be, the information influences only one direction without the probability of natural disasters and competitions, making it hard for the model to be accurate.