What is the probability distribution

Assignment Help Financial Management
Reference no: EM131224873

A stock price is currently $60 per share and follows the geometric Brownian motion dPt = µPt dt + σ Pt dt.

Assume that the expected return µ from the stock is 20% per annum and its volatility is 40% per annum.

What is the probability distribution for the continuously compounded rate of return of the stock over 2 years? Obtain the mean and standard deviation of the distribution.

Reference no: EM131224873

Questions Cloud

Example of adding user : Research and describe a script which you want to use to add users in AD of your AAP project. Provide an example of adding user.
Concerning the cash flow-production cycle : Which of the following statements concerning the cash flow-production cycle is true?
Drawbacks to facilities maintaining a hybrid system : What are the drawbacks to facilities maintaining a hybrid system while trying to properly file documents in both digital and paper-based systems?
Relationship between good data and high quality information : Write one or two paragraphs in response to the question "Why should a manager care about relational database management system (DBMS)? In answering the question, you should keep the answers to the following questions in mind: What is the relationship..
What is the probability distribution : Assume that the expected return µ from the stock is 20% per annum and its volatility is 40% per annum.- What is the probability distribution for the continuously compounded rate of return of the stock over 2 years?
What is the fcs field for : What is the FCS field for? What are start and stop indicator flags? What is CRC and what is it for?
Designing a wireless network : What should be considered when designing a wireless network?
How important is the interest group to your representative : How does the group influence the state government? What techniques does the group use? How important is the interest group to your representative?
What is the probability distribution for the stock price : Assume that the expected return µ from the stock is 20% per annum and its volatility is 40% per annum.- What is the probability distribution for the stock price in 2 years?

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

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