Question: Consider a security with the stock prices (80 with probability 1/8) (90 with probability 2/8 ) S(1)= (100 with probability 3/8) (110 with probability 2/8)

Consider a security with the stock prices

(80 with probability 1/8)

(90 with probability 2/8 )

S(1)= (100 with probability 3/8)

(110 with probability 2/8)

  1. What is the current price of the stock for which the expected return would be 12%?
  2. What is the current price of the stock for which the standard deviation would be 18%

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