Problem:
The current spot price of a stock is $50, the expected return of the stock is 7%, and the volatility of the stock is 20%. The risk-free rate is 5%.
Required:
Question: Find an 80%-confidence interval for the stock price in 3 months. Also compute the expected percent change in the stock between months 0 and 6.
Note: Please provide equation and explain comprehensively and give step by step solution.