Vacinox is a biotechnology firm that is about to announce the results of its clinical trials of a potential new vaccine. If the trials are successful, Vacinox stock will be worth $80 per share. However, if the trials are not successful, then Vacinox stock will only be worth $12 per share. If on the morning that the announcement is scheduled, Vacinox stock is trading for $60.96, then the
probability that investors place on the trials being successful are closest to:
A) 48%
B) 50%
C) 60%
D) 72%
D
Explanation: D) price = (p)success + (1 - p)fail = 60.96 = p(80 ) + (1 - p)12 → 68p = 48.96 → p = .72
Business
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