A stock price is currently 100. Assume that the expected return from the stock is 15% and that its variance is 20%. The risk-free interest rate is 10% per annum. What is the probability distribution for the stock price over a one-year period? Determine 95% confidence intervals.
Added by Travis E.
Step 1
Expected return = 100 x 15% = 15 Standard deviation = sqrt(20%) x 100 = 44.72 Show more…
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