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5.13. Suppose that a nondividend-paying stock with current price of $45 has an instantaneous annual expected return of 8% and annual volatility of 15%. a)
5.13. Suppose that a nondividend-paying stock with current price of $45 has an instantaneous annual expected return of 8% and annual volatility of 15%. a) Using a 100-period CRR tree, forecast the price of the stock 3 months from now, i.e., find the expected price of the stock 3 months from now. b) What is your forecast if you use an 80-period CRR tree? c) Using an 80-period CRR tree, determine the probability of your forecasted price occurring. 5.13. Suppose that a nondividend-paying stock with current price of $45 has an instantaneous annual expected return of 8% and annual volatility of 15%. a) Using a 100-period CRR tree, forecast the price of the stock 3 months from now, i.e., find the expected price of the stock 3 months from now. b) What is your forecast if you use an 80-period CRR tree? c) Using an 80-period CRR tree, determine the probability of your forecasted price occurring
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