Problem
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) What is the expected stock price?
b) What is the width of the 95% confidence interval forth stock price at the end of one day?
c) Suppose there is excess kurtosis of 10. What would this do to the confidence interval? Provide 2 arguments.