## Question

# You have a stock trading at $100. The stock follows a lognormal distribution with drift of 20% and volatility of 40%. The risk free rate

You have a stock trading at $100. The stock follows a lognormal distribution with drift of 20% and volatility of 40%. The risk free rate is 1%. What is the probability for a 4 – month 90 put expire in the money? Find (-d2). Compare the results. What is the risk-neutral probability for a 4-month 90 put to expire in the money?

## Step by Step Solution

5.00 Ratings (12 Votes)

There are 3 Steps involved in it

### Step: 1

### Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

### Step: 2

### Step: 3

## Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started## Recommended Textbook for

### Fundamentals of Investments Valuation and Management

**Authors:** Bradford D. Jordan, Thomas W. Miller

5th edition

978-0077283292

#### Students also viewed these Corporate Finance questions

### Question

Answered: 1 week ago

### Question

Answered: 1 week ago

### Question

Answered: 1 week ago

### Question

Answered: 1 week ago

### Question

Answered: 1 week ago

### Question

Answered: 1 week ago

### Question

Answered: 1 week ago

### Question

Answered: 1 week ago

### Question

Answered: 1 week ago

### Question

Answered: 1 week ago

### Question

Answered: 1 week ago

### Question

Answered: 1 week ago

### Question

Answered: 1 week ago

### Question

Answered: 1 week ago

### Question

Answered: 1 week ago

### Question

Answered: 1 week ago

### Question

Answered: 1 week ago

### Question

Answered: 1 week ago

### Question

Answered: 1 week ago

### Question

Answered: 1 week ago

### Question

Answered: 1 week ago

### Question

Answered: 1 week ago

### Question

Answered: 1 week ago

Study smarter with the SolutionInn App