Question: Consider a security with the stock prices S (1) = 80 (probability 0.125) = 90 (probability 0.25) = 100 (probability 0.375) = 110 (probability 0.25)

Consider a security with the stock prices

S (1) = 80 (probability 0.125)

= 90 (probability 0.25)

= 100 (probability 0.375)

= 110 (probability 0.25)

(a) What is the current price of the stock for which the expected return would be 12%?

(b) What is the current price of the stock for which the standard deviation would be 18%

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