Assume that its year-end price follows a lognormal, Financial Management

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Assume that its year-end price follows a lognormal

A stock price is currently 50. Its expected return and volatility are 12% and 30%, respectively. Assume that its year-end price follows a lognormal distribution (i.e., ln(ST /50) follows a normal distribution, where T = 1).

What is the probability that the stock price will be greater than 60 in 1 year?

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Financial Management: Assume that its year-end price follows a lognormal

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Financial Management: Assume that its year-end price follows a lognormal

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