Mod 4 #9

[LTH]

Has anyone done this? Don't we need to know the valuse of S0?

Thanks.

[Jenka]

It's ln(900,000)

[Gandalf]

Based on this, S0 is 900,000. But then you do want to proceed to ln(S0).

[LTH]

Originally Posted by Jenka

It's ln(900,000)

This was my logic:
Pr(St/S0>1.111) -> P(St>S0 * 1.111) -> P(ln(St) > ln(S0*1.111))

now, using S0=900,000, and normalizing this probability gives option C the smallest probability, which was the right answer...

What's wrong with my idea?

[Jenka]

Originally Posted by Gandalf

Based on this, S0 is 900,000. But then you do want to proceed to ln(S0).

I stand corrected. I meant S0. Honestly.