7. A stock that follows a GBM is currently priced at 50 kr. Its expected return...
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7. A stock that follows a GBM is currently priced at 50 kr. Its expected return and volatility are 10% and 30%, respectively. What is the probability that the stock price will be larger than 70 kr in 2 years, i.e what is P(ST > 80) when T = 2? Carefully explain each step in your calculation. (Hint: ST 80 when In ST > In 80.) 7. A stock that follows a GBM is currently priced at 50 kr. Its expected return and volatility are 10% and 30%, respectively. What is the probability that the stock price will be larger than 70 kr in 2 years, i.e what is P(ST > 80) when T = 2? Carefully explain each step in your calculation. (Hint: ST 80 when In ST > In 80.)
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