--%>

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 : Explain breakthroughs on

    Explain breakthroughs on low-discrepancy sequences.

  • Q : Explain lognormal random walk based on

    Explain lognormal random walk based on Brownian motion.

  • Q : Problem on Stock per share value ABC

    ABC Company plans to buy back 1 million shares of its own stock from its cash reserves at $50 a share. This will raise the bankruptcy costs by $10 million, and the debt/assets ratio from 35% to 40%. The income tax rate of the company is 30%. Determine the value of the

  • Q : Overview of capital market efficiency

    Provide a brief overview of Capital Market Efficiency?

  • Q : Bond Price Information What is Bond

    What is Bond Price Information: Answer: Corporate bond market is not considered to be much transparent as it trades predominantly over the counter and investors do n

  • Q : Company Valuation Project Hello, Need a

    Hello, Need a top-notch finance expert to complete a company valuation assignment for me for a class. Will attach details. Please inform me if you have your graduate level resource who is good with company valuations and executive summary writeup of the analysis please. English writing skills ar

  • Q : Standard deviation of portfolios returns

    Assume that you have $50,000 which you want to invest in two companies, XYZ Books and ABC Audio. XYZ has a return of 10% and standard deviation 15%, while ABC has return of 15% with a standard deviation of 20%. The correlation coefficient between them is .5. Your port

  • Q : What is nonlinearity in option pricing

    What is nonlinearity in option pricing model?

  • Q : Calculate valuation realized by

    Is a valuation realized through a prestigious investment bank a scientifically approved result that any investor could utilize as a reference?

  • Q : Set of conflicts in reducing working

    Give an illustration of a set of conflicts encountered when attempting to reduce working capital?