The current spot price of a stock is $38.00, the expected rate of return (per annum) of the stock is 9.7%, and the weekly volatility of the stock is 3.4%. The risk-free rate (per annum) is 4.6%.
Assume there are 52 weeks in a year. Additionally, assume the log-normal model for the stock. Let X be a random variable denoting the natural log of the price of the stock in 12 months, where X is normally distributed. Compute the mean μμ and standard deviation σσ of X .
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