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4. Given a lognormal distribution for stock price with S = Soez , where Z is normally distributed with mean (-$2 2 ) and variance
4. Given a lognormal distribution for stock price with S = Soez , where Z is normally distributed with mean (-$2 2 ) and variance o2, where So = 100, 0 = 30% . (a) Compute the expected value of E[In(S)]. (b) Compute E[S]; ( i.e. how much would you pay for the stock to be delivered .) (c) Compute the probability that the stock exceeds a level K = 100, namely P(S > K). (d) (Extra 5 ) Compute the expected value of E[In(S) 2]
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