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The standard deviation of continuously compounded rate of returns on a stock over 13 years is 0.03; the annual continuously-compounded interest rate is 0.05, and
The standard deviation of continuously compounded rate of returns on a stock over 13 years is 0.03; the annual continuously-compounded interest rate is 0.05, and the stock pays dividends at an annual continuously-compounded rate of 0.04. The stock price is currently $100 per share. Let us assume the random walk model for the evolution of the stock price (with the unit of time 13 years). What is the maximum possible value the stock price can be equal to in 26 years?
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