The price of a stock is $75 per share. The stock is not expected to pay any
Question:
The price of a stock is $75 per share. The stock is not expected to pay any cash dividends over the
next year. The returns on the stock have a normal probability distribution with expected value of 15%
and a standard deviation of 40%.
(a) What is the probability that the price of the stock will be $25 or less one year from now?
(b) What is the probability that the price of the stock will be between $75 and $100 one year from
now?
(c) What is the probability that the price of the stock will be exactly $25 one year from now?
(d) What is the minimum amount you can lose on the stock on a per share basis with the probability
of 10%?
Essentials of Business Analytics
ISBN: 978-1285187273
1st edition
Authors: Jeffrey Camm, James Cochran, Michael Fry, Jeffrey Ohlmann, David Anderson, Dennis Sweeney, Thomas Williams