The current spot price of a stock is $50, the expected return of the stock is 7%, and the volatility of the stock is 20%. The risk-free rate is 5%. Find an 80%-condence interval for the stock price in 3 months. Also compute the expected percent change in the stock between months 0 and 6.

The current spot price of a stock is $50, the expected return of the stock is 7%, and the volatility of the stock is 20%. The risk-free rate is 5%. Find an 80%-condence interval for the stock price in 3 months. Also compute the expected percent change in the stock between months 0 and 6.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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i will 10 upvotes urgent. The current spot price of a stock is $50, the expected return of the stock is 7%, and the volatility of the stock is 20%. The risk-free rate is 5%. Find an 80%-condence interval for the stock price in 3 months. Also compute the expected percent change in the stock between months 0 and 6.

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Step 1: Introduction to Black Scholes Model

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Step 2: 80% Confidence Interval For Stock Price in 3 Months

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Step 3: Expected Percentage Change Calculation

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