Question: Problem #13: We assume that the stochastic process for a stock price is a Geometric Brownian motion, with expected return [3 marks] of 17% 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 17% and, volatility of 30%. The stock price is currently $83. (a) Find the expected value of the stock price in 5 years. (b) Find the probability that the stock price will be above $147 in 5 years. (A) 195.19 (B) 196.19 (C) 194.19 (D) 197.19 (E) 198.19 Problem #13: We assume that the stochastic process for a stock price is a Geometric Brownian motion, with expected return [3 marks] of 17% and, volatility of 30%. The stock price is currently $83. (a) Find the expected value of the stock price in 5 years. (b) Find the probability that the stock price will be above $147 in 5 years. (A) 195.19 (B) 196.19 (C) 194.19 (D) 197.19 (E) 198.19

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