Question
A stock now sells at a price of $25 per share. The distribution of the price of the stock one year from now is believed
A stock now sells at a price of $25 per share. The distribution of the price of the stock one year from now is believed to be as follows:
f(x) =24000/x^4. x>=20
a) What is the probability that the stock price will exceed $25 per share one year from now?
b) Find the mean and median of this distribution.
c) Find the 87.5 percentile of this distribution.
d) Let W = X - 25 IF X 25
= 0 IF X < 25 Compute E(W). What is the financial interpretation of W?
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Analysis for Financial Management
Authors: Robert Higgins
11th edition
77861787, 978-0077861780
