Stock ABC Is Currently Trading at 100 $\mu = 0$ And $\sigma = 0.40$

question 6

Multiple Choice

Stock ABC is currently trading at 100. The stock has lognormal returns with with $\mu = 0$ and $\sigma = 0.40$ . What is the 95% confidence interval for the stock price in 3 months?

• A) \(( 21.6,178.4 )\)
• B) \(( 67.6,148.0 )\)
• C) \(( 45.7,219.0 )\)
• D) Cannot be calculated from the given information.

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Definitions:

Demand

The volume of goods or services that shoppers are prepared and financially able to buy at several price points within a particular period.

Midpoint Method

A technique used in economics to calculate the elasticity of demand or supply, using the average of the initial and final quantities and prices to determine the percentage change.

Inelastic

Refers to a scenario in which the demand or supply for a product or service is relatively insensitive to price fluctuations.

Price Elasticity

A measure of how much the quantity demanded or supplied of a good changes in response to a price change.