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Corporate Finance · End Term · 21 Dec 2025 · September 2025 term

Question 2: A stock currently trading at Rs 60 can either rise to Rs …

Question 2

+3 marksOne correct option

A stock currently trading at Rs 60 can either rise to Rs 75 or fall to Rs 50 in three months. The three-month risk-free rate is 5%. Using the risk-neutral approach, what is the risk-neutral probability that the stock price increases?

  1. A

    52.0%

  2. B

    78.6%

  3. C

    60.0%

  4. D

    45.0%

Show answer

Correct answer

  • A

    52.0%

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Question 2 of 30 in the IIT Madras BS Corporate Finance (Corporate Finance) End Term paper sat on 21 Dec 2025, in the September 2025 term (Corporate Finance 18 Dec 25). It carries 3 marks.

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