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Write the equation for a log-normal stock dynamics

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Question: A stock price has an expected return 12% per year and volatility of 25% per year. Currently the stock price is $40. Assume 252 days per year.

a) Write the equation for a log-normal stock dynamics.
b) Then write the equation for the change in stock price.
c) Then find the standard deviation of the stock price at the end of one day?
d) Suppose there is excess kurtosis of 10. What would you assume about the standard deviation? Provide 2 reasons.

Reference no: EM133223770

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