SOA Exam P Sample Question 241
Study guide: Exam P-1
An investor invests 100 dollars in a stock. Each month, the investment has probability 0.5 of increasing by 1.10 dollars and probability 0.5 of decreasing by 0.90 dollars. The changes in price in different months are mutually independent.
Calculate, using the Central Limit Theorem, the probability that the investment has a value greater than 91 dollars at the end of month 100.
- A) 0.63
- B) 0.75
- C) 0.82
- D) 0.94
- E) 0.97
Answer this question and see the worked solution