A stock is selling for $53.20.Interest rates are 6.0% and the returns on the stock have a standard deviation of 24.0%.What is the forecasted up movement in the stock over a 6-month interval?
A) $64.96
B) $69.69
C) $73.48
D) $76.96

Question

Quizplus · Accepted Answer

The forecasted up movement can be calculated using the formula for the expected price in an up state: Current Price * e^(standard deviation * sqrt(time)). Here, time is 0.5 years (6 months), so the calculation is $53.20 * e^(0.24 * sqrt(0.5)) ≈ $64.96.

A Stock Is Selling for $53