[1093] in Daily_Rumour
Stock Market
daemon@ATHENA.MIT.EDU (sipb5@MIT.EDU)
Mon Nov 11 22:34:10 1996
From: sipb5@MIT.EDU
Date: Mon, 11 Nov 1996 22:33:27 -0500
To: rumor@MIT.EDU
The stock market has two datapoints for each stock: trading ratio and
price. Trading ratio is the "rate of exchange" of a stock vs. a stock
at 1:1. To trade one stock for another, divide the stock trading ratio
of the one you own by the one you want to trade to. Drop all
fractions/decimals when you are finished with your calculations.
e.g. Stock Trade Ratio Price
ACorp 4:3 1.9
BCorp 3:4 2.1
You want to trade stock from ACorp (because it's going to go down, you
think) for stock in BCorp.
4/3 divided by 3/4
equals
4/3 times 4/3
equals
16/9
So, you can trade 16 units of ACorp for 9 units of BCorp
(1.77 ACorp = 1 BCorp ; 1 ACorp = .5625 BCorp). So, if you have
4 ACorp, you can buy 2.25 rounded down to 2 units of BCorp. If BCorp
were actually trading at 1:1, 1.33 ACorp = 1 BCorp, or
1 ACorp = .75 BCorp.
Price is the value of the stock. Round down after your final
calculation.
