Question 7Suppose that the price (S) of a stock has an expected return of 12% per annum and a volatility of 24%per annum. The stock price is currently $88.(a) Calculate the expected stock price at the end of the next day.(b) Calculate the standard deviation of the stock price at the end of the next day.(e) Find the 95% confidence limits for the stock price at the end of the next day.(d) If you are to do the same for the stock price at the end of the month, assuming that it is thebeginning of a month now, is it appropriate to use the same method as above? Explain.

The price of the stock is S=$88 Expected return is μ=0.12 Volatility of the stock is σ=0.24 The time…

Suppose that the price (S) of a stock has an expected return of 12% per annum and a volatility of 24% per annum. The stock price is currently $88. (a) Calculate the expected stock price at the end of the next day. (b) Calculate the standard deviation of the stock price at the end of the next day. (c) Find the 95% confidence limits for the stock price at the end of the next day. (d) If you are to do the same for the stock price at the end of the month, assuming that it is the beginning of a month now, is it appropriate to use the same method as above? Explain.

Suppose that the price (S) of a stock has an expected return of 12% per annum and a volatility of 24% per annum. The stock price is currently $88. (a) Calculate the expected stock price at the end of the next day. (b) Calculate the standard deviation of the stock price at the end of the next day. (c) Find the 95% confidence limits for the stock price at the end of the next day. (d) If you are to do the same for the stock price at the end of the month, assuming that it is the beginning of a month now, is it appropriate to use the same method as above? Explain.

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

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