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Question
A stock is valued at $55.00. The annual expected return is 12.0% and the standard deviation of annualized returns is 22.0%. If the stock is lognormally distributed, what is the expected median stock price after 3 years?A) $57.67
B) $67.67
C) $77.67
D) $87.67
Answer
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Related questions
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Assume the following: LN(S) and LN(Q) have a correlation coefficient of -0.65, S(0) = 55, Q(0) = 60, r = 0.04, σs = 0.22 σQ = 0.15, and dividends = 0. Using formula 20.39, what is the price of a claim that pays Q/?
A) $8.16
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