Exercise 1: Suppose that you bought Iberdrola stock 60 weeks ago at the price of 10 , and sold the stock today at the price of 15 . a) What is the annualized simple return on your investment?; b) What is the annualized log (i.e. continuously compounded) return on your investment?; Assume that the stock didn't pay any dividend.

Exercise 2: Suppose that the current price of ABC is 30 . a) What is the expected stock price in nine months' time if we assume that the drift rate is u= 15% per annum, and volatility = 30% per annum?; b) What is the probability that the stock price in nine months' time is higher than 32 ?; c) What is the probability that the stock price in nine months' time is between 28 and 32 ?