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7.10 : A stock price has an expected return of 9% and a volatility of 25%. It is currently $40. What is the probability that

7.10 : A stock price has an expected return of 9% and a volatility of 25%. It is currently $40. What is the probability that it will be less than $30 in 18 months?

7.11 : An investor owns 10,000 shares of a particular stock. The current market price is $80. What is the worst case value of the portfolio in six months? For the purposes of this question, define the worst case value of the portfolio as the value which is such that there is only a 1% chance of the actual value being lower. Assume that the expected return and volatility of the stock price are 8% and 20%, respectively.

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