A stock is trading at $100. Assume that the stock price follows lognormal distribution. The expected return

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A stock is trading at $100. Assume that the stock price follows lognormal distribution. The expected return on the stock is 5% and the volatility of the stock return is 40%. Let S be the stock price after six months.

(a) What is the mean and standard deviation of ln(S) (natural log of S)?

(b) What is the median (50th percentile value) value of ln(S)?

Posted Date: May 17, 2024 04:11 PM

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A stock is trading at $100. Assume that the stock price follows lognormal distribution. The expected return

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