discrete vs continuous stock, continuous, example

spartan1

How is Quoted stock prices on the NASDAQ is an example of discrete random variable? Shouldn't this be continuous? Could you explain this by an example?

Benjiko

sgupta0827 Wrote:
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> How is Quoted stock prices on the NASDAQ is an
> example of discrete random variable? Shouldn't
> this be continuous? Could you explain this by an
> example?


I am not sure but I think it is because they quote the price to 2 decimal places (which of course makes sense) So though there are infinite values, they are still discrete since between any two values there are not infinite values.
In the case of continuous, there are infinite values between any two values. Think number line and how there are infinite points between any two points on the number line.

dotamasta

anish Wrote:
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> sgupta0827 Wrote:
> --------------------------------------------------
> -----
> > How is Quoted stock prices on the NASDAQ is an
> > example of discrete random variable? Shouldn't
> > this be continuous? Could you explain this by
> an
> > example?
>
>
> I am not sure but I think it is because they quote
> the price to 2 decimal places (which of course
> makes sense) So though there are infinite values,
> they are still discrete since between any two
> values there are not infinite values.
> In the case of continuous, there are infinite
> values between any two values. Think number line
> and how there are infinite points between any two
> points on the number line.

Thanks Anish..That helps!..btw the other choice in the question was "return on real state investment". I think return will always be continuous. Right?

Wasteoftime

Return on real estate would be discrete wouldn't it? There are no range of returns for this.

invic

bar that i understand yeah it is continuous

Londonrocks

The quoted price is not rounded - it's actually in pennies. If you round a price, it's still continuous - you merely present it as rounded.

spartanag07

sgupta0827 Wrote:
-
> The only doubt i had is if you could round off the
> price then why can't you round off the returns?


Sure you can. e.g. If you present every return upto 2 decimal places, the data becomes discrete.