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Use excel to answer the following questions. Consider the following environment: the current spot price of an asset is $50, the annualized volatility is 11.5%,

Use excel to answer the following questions. Consider the following environment:

the current spot price of an asset is $50,

the annualized volatility is 11.5%, and

the interest rate is 3% per year

a. What are the values of the parameters A and B of the corresponding lognormal distribution?

b. What is the expected value of the asset in a year? What is the one-year forward price of the asset based on this model?

c. What is the median value of the terminal price distribution?

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