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14 8% 3% Assume that s(0) = RM50 and stock returns as follows: Scenario 11 72 73 wi 8% -2% W2 8% -2% 10% W3

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14 8% 3% Assume that s(0) = RM50 and stock returns as follows: Scenario 11 72 73 wi 8% -2% W2 8% -2% 10% W3 5% 4% 7% Table 1 a Compute the possible stock prices in a four-step economy. 3% 3% (7.5 Marks) b. Sketch a tree of price movements. (7.5 Marks) [Total: 15 Marks]

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