Thread: Risk Neutral valuation

Hi everyone,

Can someone help me solve this equation?

0.07 = (ProbabilityRise)(.25) + (1 – ProbabilityRise)(–.20)

Originally Posted by Lawstudent

Hi everyone,

Can someone help me solve this equation?

0.07 = (ProbabilityRise)(.25) + (1 – ProbabilityRise)(–.20)

Probability Rise = 0.60

Originally Posted by Lawstudent

Hi everyone,

Can someone help me solve this equation?

0.07 = (ProbabilityRise)(.25) + (1 – ProbabilityRise)(–.20)

This worries me, LawStudent. Why are you in this class without basic algebra skills? Are you SURE you're in the right class? It's not likely to get any easier.