You are to estimate a stock’s annualized volatility using its prices in the past $6$ weeks.
\begin{array}{r|l} \text{Week} & \text{Stock Price}\\\hline 1 & 45\\2&48\\3&50\\4&49\\5&42\\6&44\end{array}
The stock pays dividends with continuously compounded rate $2\%$.
- $(a)$ Find the historical volatility for this stock over the period.
- $(b)$ Find the expected rate of appreciation of the stock.
I have figured out part a, the HV is $0.6456$. I am lost on part $(b)$ however. I have tried searching online to no avail (this is for the SoA MFE exam). I'd appreciate any help on this, thanks.