You have bought a stock for a $100. You are expecting to get a return of 10% while the volatility of your stock is 20%. if you intend to sell the stock after one year. a- What is the stock price range (upper and lower bound) assuming that the stock returns are normally distributed, and a two-tailed confidence interval of 90% ? explain your answer. b- What is the Value at Risk of this investment at a confidence interval of 90% and 95%? explain your answer. c- What are the similarities and differences in calculating the above questions (a and b)
You have bought a stock for a $100. You are expecting to get a return of 10% while the volatility of your stock is 20%. if you intend to sell the stock after one year. a- What is the stock price range (upper and lower bound) assuming that the stock returns are normally distributed, and a two-tailed confidence interval of 90% ? explain your answer. b- What is the Value at Risk of this investment at a confidence interval of 90% and 95%? explain your answer. c- What are the similarities and differences in calculating the above questions (a and b)
Chapter6: Risk And Return
Section: Chapter Questions
Problem 14P
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Question
You have bought a stock for a $100. You are expecting to get a return of 10% while the
volatility of your stock is 20%. if you intend to sell the stock after one year.
a- What is the stock price range (upper and lower bound) assuming that the stock returns
are
answer.
b- What is the Value at Risk of this investment at a confidence interval of 90% and 95%?
explain your answer.
c- What are the similarities and differences in calculating the above questions (a and b)?
Please support your answer by drawing the needed figures showing each case.
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