Probability of a jump in any particular trading day

Assignment Help Finance Basics
Reference no: EM132853779

Assume that over short periods of time, the stock price is approximately normally distributed with mean return of 10% per year and annual standard deviation of 30%.

Suppose that the expected number of discrete stock price jumps is 2 per year. What would be the probability of a jump in any particular trading day? Assume 250 trading days per year and express your answer as a decimal, not a percentage.

Reference no: EM132853779

Questions Cloud

What is blue river bank net interest income : 1- You are given the balance sheet of Blue River Bank below. The numbers shown below are in millions of U.S. Dollars.
Explain stock required rate of return : If the market risk premium increased to 5%, what would happen to the stock's required rate of return?
What is the net realizable value : You make 4,000 units and sell them for $5 each. Your expenses related to this item total $8,000 fixed and $6,000 variable. What is the net realizable value
What were the average unit costs of curve : Under an absorption costing system, what were the average unit costs of Curve and Slid during the current year? Showw appropriate supporting calculations
Probability of a jump in any particular trading day : Suppose that the expected number of discrete stock price jumps is 2 per year. What would be the probability of a jump in any particular trading day?
Calculate the break-even level of income : Calculate the break-even level of income for a family of four. If all families above the break-even level of income pay a flat-rate 25 percent tax
What is the basic goal of financial management : What is the basic goal of financial management with regard to capital structure?
What is the borrower loan-tovalue ratio : If the borrower purchases a house that is appraised for $346,154, what is the borrower's loan-tovalue ratio (LTV)? How does the bank use this number
How much money will be in the account after the last payment : You plan to buy a house in 6 years. You want to save money for a down payment on the new house. You are able to place $256 every month at the end of the month i

Reviews

Write a Review

Finance Basics Questions & Answers

  Find what must the project initial cost be

A project has the following cash flows for years 1 through 3 respectively: 1,296, 1,137, 1,200. Using a discount rate of 8.1 percent, it has been determined.

  Preparing a flexible budget

The Cabazos Company is in the process of preparing a flexible budget to determine why operating profit fell below the budgeted amount. Complete the following flexible budget and list the reasons for the variance between budgeted and actual profit.

  Suppose that if hospital supplies were dropped retail store

molina medical supply company is trying to decide whether or not to continue distributing hospital supplies. the

  Calculate the expected return and standard deviation

Given the following two stock portfolio, with 40% invested in Stock A and 60% invested in Stock B:

  Current debt and issue new one to save on interest costs

A treasurer argues with the CFO that because "interest rates have dropped substantially in the last year, the firm should best' back their current debt and issue new one to save on interest costs". The CFO answers that this only makes sense for "the ..

  Prepare adjusting entries at the end of the year

Prepare entries for these transactions under the method that records prepaid expenses and unearned revenues in the balance sheet accounts.

  What is the yield to maturity on the given bonds

Fin 3403- Rockinghouse Corp. plans to issue seven-year zero coupon bonds. It has learned that these bonds will sell today at a price of $369.37. Assuming annual coupon payments, the yield to maturity on these bonds is ___%?

  A firm is evaluating a proposal which has an initial

a firm is evaluating a proposal which has an initial investment of 35000 and has cash flows of 10000 in year 1 20000 in

  Calculate the degree of financial leverage

Utara Savings and Loan SdnBhd has a current capital structure consisting of RM250,000 of 16% (annual interest) debt and 2,000 shares of common stock. The firm pays taxes at the rate of 40%.

  Explain discount rate are the npvs

Moen Company inc is considering Projects A and B with the cash flows shown below. The firm's WACC is 10%. There have been discussions within the company

  Calculating cost of equity

The Dybvig Corporation's common stock has a beta of 1.7. If the risk-free rate is 4.8 percent and the expected return on the market is 10 percent, what is Dybvig's cost of equity capital? (Do not round intermediate calculations and round your fina..

  What is the target variable cost per mouse

There will be $8,000,000 in fixed costs associated with the mouse. If the company desires to make a profit $2,000,000 on the mouse, what is the target variable

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd