Finance Exam involving: Options, Stochastic Processes, Binomial Model, Black-Scholes Model
Example:
A variable is currently 40
It follows a Markov process
Save your time - order a paper!
Get your paper written from scratch within the tight deadline. Our service is a reliable solution to all your troubles. Place an order on any task and we will take care of it. You won’t have to worry about the quality and deadlines
Order Paper NowProcessis stationary (i.e. the parameters of the process do not change as we move through time)
At the end of 1 year the variable will have a normal probability distribution with mean 40 and standard deviation 10
Questions
What is the probability distribution of the stock price at the end of 2 years? ½ years? ¼ years? Dt years?