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serianmollel
24.06.2021 •
Mathematics
The price of oil is currently at $24 but you expect it to either increase by 18 percent or decrease by 7 percent over the next 6 months. The 6-month risk-free rate of interest is 1.98 percent. What is the probability that the price will increase
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Ответ:
the probability that the price will increase is 0.3592 or 35.92%
Step-by-step explanation:
Given the data in the question;
risk free interest rate = 1.98 percent
expectations are ; either increase by 18 percent or decrease by 7 percent over the next 6 months
hence
increment by 18 percent; d = 1 + 18% = 1 + 0.18 = 1.18
reduction by 7 percent; u = 1 - 7% = 1 - 0.07 = 0.93
so the probability that the price of the oil will increase will is;
P = (( 1 + rate ) - u ) / ( d - u )
we substitute
P = (( 1 + 1.98% ) - 0.93 ) / ( 1.18 - 0.93 )
P = (( 1 + 0.0198 ) - 0.93 ) / 0.25
P = ( 1.0198 - 0.93 ) / 0.25
P = 0.0898 / 0.25
P = 0.3592
P = ( 0.3592 × 100 )%
P = 35.92%
Therefore, the probability that the price will increase is 0.3592 or 35.92%
Ответ:
1) 9.4
2)12.0
Step-by-step explanation:
asquared plus bsquared equals csquared