What is the mean for the log price relative

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Reference no: EM13791275

The mean rate of return on a stock is estimated at 20% while the volatility is 40%: The risk free interest rate is 5%:

(a) What is the mean for the log price relative?

(b) Construct the .nal stock prices for a 10 period one year tree.

(d) Construct the associated risk neutral probabilities.

Reference no: EM13791275

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