mean-rate-return-stock-estimated-20-while-volatility-40-risk-free-interest-rate-5-what-mean-

 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.

(c) Construct the statistical probabilities for these stock prices

 

(d) Construct the associated risk neutral probabilities.

“Get 15% discount on your first 3 orders with us”
Use the following coupon
FIRST15

Order Now