Questions answered in this chapter:
I recently bought 100 shares of GE stock. What is the probability that during the next year this investment will return more than 10 percent?
I’m trying to determine how to allocate my investment portfolio between stocks, T-Bills, and bonds. What asset allocation over a five-year planning horizon will yield an expected return of at least 10 percent and minimize risk?
The last few years have shown that future returns on investments are highly uncertain. In Chapter 68, I showed how to use the lognormal random variable to model stock prices. Many financial experts have been critical of using the lognormal random variable to model stock prices because ...