Assume the returns of a stock for the previous five years are as follows: 10%,...
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Finance
Assume the returns of a stock for the previous five years are as follows: 10%, 6%, -5%, 9% and -2%?
a) What is the historical standard deviation of the returns of this stock?
b) If the returns are normally distributed, what is the range of returns expected using a 95% level of confidence (use z=1.96)?
c) If the stock price is currently $30, what is the expected maximum and minimum price of the stock at the end of the year assuming 95% level of confidence? Assume no dividend payment will be paid during the period.
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