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(Solution) - The daily log returns on a stock are independent and -(2025 Original AI-Free Solution)

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Academic Level: Undergrad. (yrs 3-4)

Paper Format: APA

Pages: 5 Words: 1375
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The daily log returns on a stock are independent and normally distributed with mean 0.001 and standard deviation 0.015. Suppose you buy $1000 worth of this stock.
(a) What is the probability that after one trading day your investment is worth less than $990?
(b) What is the probability that after five trading days your investment is worth less than $990?

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