how to calculate stock price in globus simulation

Beginning with the political effects of these policy changes on Soviet-American relations and the national security of the two superpowers, the study then expands its focus to changes in the budgeting behavior of the United States and the impact on the domestic economy. In the first, it is assumed that the Reagan policies represent a permanent shift in the American position, while in the second case these policies are seen as a temporary aberration, remaining in effect only as long as Reagan is in the White House. Two versions of this scenario are examined.

Using the global political-economic simulation model GLOBUS, a set of Reagan-like budgeting and foreign policies are formally implemented within the model and the resulting changes in behavior systematically evaluated. The current study takes as its focus the Reagan legacy in the area of national security policy: specifically, the possible effects of Reagan's defense spending and Soviet policies. They are really the same model just expressed differently.As the Reagan presidency draws to an end, speculation grows as to its legacy in various areas, from domestic economics to international politics. It gives you a future price model that allows you to price a stock as if the risk-free rate can be used to discount the future value to get the right present value. The closed form solution does not give you the actual price model. But the future value of the stock must look like a smaller number (say, perhaps, 94) so that the price today, $S_0$, is maybe 89 or some such. So, for example, if $B_0=100$ and $r=5%$ the future value of the bond in one year is 105, and its present value is 100.

This is a bit of mathematical sleight of hand but it all works out the same. Simply, if you 'roll forward' a simulation the stock will outperform the bond on average, but if you see a price model under risk-neutrality the path must be such that when you discount future values to today they must give you a fair value today for the stock. As a result the future value of the stock at the same time must be below $B_t$ so that it discounts back to a lower value at $t=0$ using $r$ as the discount rate to earn a return that compensates for the risk. So if we start with $S_0=B_0$ the bond trajectory of price $B_t$ must discount back to $B_0$ when the risk-free rate is used. The closed-form solution does everything in risk-neutral space. In essence, the stock is priced today at a discount to the bond. I simulated the values with the following formula: I started with the famous geometric brownian motion.

I want to simulate stock price paths with different stochastic processes.

How to calculate stock price in globus simulation