Path based on uniformly distributed random numbers

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Reference no: EM131899418

A stock is currently selling for $100. The continuously compounded riskfree rate is 11%. The continuously compounded dividend yield is 3%. The volatility of the stock according to the Black-Scholes framework is 30%. Find the new stock prices along a path based on the uniformly distributed random numbers: 0.12, 0.87, and 0.50, given that T = 1 year. That is, find S_1/3 , S_2/3 , and S₁.

Reference no: EM131899418

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