In this chapter, assume the log-normal model. Unless otherwise stated, assume no arbitrage opportunities

The current spot price of a stock is $33.00, the expected rate of return is 7.2%, and the volatility of the stock is 22%. The risk-free rate is 5.7%.

(a) Find the 95%-confidence interval for the stock price in 5 months.

Enter your solution as an interval of the form (123.45, 678.90). Do not include dollar signs ($) in your solution.

Hint: At some point, for the standard normal variable, you need to find the 95%-confidence interval centered at 0.

(b) Compute the expected percent change in the stock over the next 5 months.

Enter your solution as a percentage value to two decimal places. Do not include the percent (%) sign.