--%>

Problem on exponential growth rate

Atlanta Company stock is predicted to follow an exponential growth rate. The relationship among the current stock price P0, future price PT after time T, and continuously compounded rate of the return r, is: PT = P0eγT. The stock doesn’t pay any dividends and it sells for $55 a share. The continuously compounded expected return of the stock is 13%, with standard deviation of 35%. Determine the probability that the stock will be selling for more than $65 after one year.

   Related Questions in Corporate Finance

  • Q : What is Net Operating Profit after Tax

    What is Net Operating Profit after Tax (NOPAT)?

  • Q : Illustrates beta and capital structure

    We are valuing a company, many smaller than ours, so as to buy it. As that company is too smaller than ours this will have no influence on the capital structure and at the risk of the resulting company. It is the reason why I believe this the beta and the capital stru

  • Q : WCR lower cost of storage Inventory is

    Inventory is an important part of WCR estimation. It is a current asset, which depletes over period of time. Also, it requires creation of facility, which would help in storing the inventory and estimate the associated cost of maintaining and transporting it. The esti

  • Q : Do expected equity flows coincide with

    Do expected equity flows coincide along with expected dividends?

  • Q : Who explain match theoretical & market

    Who demonstrated that how to match theoretical and market prices for normal bonds?

  • Q : In which cases use different WACCs Is

    Is this possible to use different WACCs within order to discount each year’s flows? In which cases?

  • Q : Explain Cost of capital aspect Cost of

    Cost of capital aspect: Estimation of WCR is beneficial from the point of view of cost of capital too. A sound working capital position is beneficial from the point of view of both owners and lenders of the company. A sufficiently positive position me

  • Q : What repercussions do variations in

    What repercussions do variations in the oil price have on the value of a company?

  • Q : What is a 3 x 1 Split What is a 3 x 1

    What is a 3 x 1 Split?

  • Q : Cost of capital You have joined Zurich

    You have joined Zurich Pvt. Ltd as a Finance manager. You are given the following information: Zurich Pvt Ltd. is a diversified manufacturing firm dealing with electrical appliances. In 2012, the firm reported an operating income of Rs. 857.60 million and faced a tax rate of 35% on income. The