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Assume that a stock's price follows the lognormal model. The current stock price is So 50 The expected annual continuously compounded return on the stock
Assume that a stock's price follows the lognormal model. The current stock price is So 50 The expected annual continuously compounded return on the stock is -10% and the stock does not pay a dividend. . The annualized volatility for the stock return is 40% (a) (2 points) What is the probability that the stock price will be greater than 55 exactly six months from today? (b) (2 points) If the stock price is greater than 55 exactly six months from today, what is the expected price of the stock
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