Generate a Random Walk

Whereas stock returns are often modeled as white noise, stock prices closely follow a random walk. In other words, today's price is yesterday's price plus some random noise.

You will simulate the price of a stock over time that has a starting price of 100 and every day goes up or down by a random amount. Then, plot the simulated stock price. If you hit the "Run Code" code button multiple times, you'll see several realizations.

Generate 500 random normal "steps" with mean=0 and standard deviation=1 using np.random.normal(), where the argument for the mean is loc and the argument for the standard deviation is scale.
Simulate stock prices P:
- Cumulate the random steps using the numpy .cumsum() method
- Add 100 to P to get a starting stock price of 100.
Plot the simulated random walk

Take Hint (-30 XP)

Exercise

Generate a Random Walk

Instructions