Question: Problem #13: We assume that the stochastic process for a stock price is a Geometric Brownian motion, with expected return [3 marks] of 18% and,

Problem #13: We assume that the stochastic process for a stock

Problem #13: We assume that the stochastic process for a stock price is a Geometric Brownian motion, with expected return [3 marks] of 18% and, volatility of 28%. The stock price is currently $85. (a) Find the expected value of the stock price in 4 years. (b) Find the probability that the stock price will be above $126 in 4 years. (A) 175.63 (B) 174.63 (C) 173.63 (D) 176.63 (E) 172.63 Problem #13(a): Select Part (a) choices. (A) 0.60 (B) 0.59 (C) 0.61 (D) 0.58 (E) 0.62 Problem #13(b): Select 1 Part (b) choices. Problem #13: We assume that the stochastic process for a stock price is a Geometric Brownian motion, with expected return [3 marks] of 18% and, volatility of 28%. The stock price is currently $85. (a) Find the expected value of the stock price in 4 years. (b) Find the probability that the stock price will be above $126 in 4 years. (A) 175.63 (B) 174.63 (C) 173.63 (D) 176.63 (E) 172.63 Problem #13(a): Select Part (a) choices. (A) 0.60 (B) 0.59 (C) 0.61 (D) 0.58 (E) 0.62 Problem #13(b): Select 1 Part (b) choices

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