Suppose that a stock price has an expected return of 16% per annum and a volatility of 30% per annum. When the stock price at the end of a certain day is $50, calculate the following: (a) The expected stock price at the end of the next day. (b) The standard deviation of the stock price at the end of the next day. (c) The 95% confidence limits for the stock price at the end of the next day. Problem 14.14. A company’s cash position, measured in millions of dollars, follows a generalized Wiener process with a drift rate of 0.1 per month and a variance rate of 0.16 per month. The initial cash position is 2.0.

Consider a variable, , that follows the process For the first three years, and ; for the next three years, and . If the initial value of the variable is 5, what is the probability distribution of the value of the variable at the end of year six

A stock price is currently 50. Its expected return and volatility are 12% and 30%, respectively. What is the probability that the stock price will be greater than 80 in two years? (Hint when .)

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Stock Price Analysis Given Expected return E 16 per annum Volatility 30 per annum Current stock pric... View the full answer