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Technology Stocks : Zitel-ZITL What's Happening -- Ignore unavailable to you. Want to Upgrade?

To: bigg e who wrote (12609)	11/5/1997 12:25:00 PM
From: Bearded One	Respond to of 18263

The downside is limited with upside unknown. I hate to be pedantic, but that's always true with any stock. You should put in probabilities. What is the probability that Matridigm will succeed? Call this SP (succeed probability) What is your best guess as to Zitel's price if Matridigm succeeds? Call this SV (succeed value) What is the probability that Matridigm will fail? Call this FP (fail...) equals 1-SP What is the Zitel's price if Matridigm fails? Call this FV (fail value) Expected price = SPSV+FPFV Here's my numbers: SP = .01 (1% chance of billions of lines of code) SV = 100 (give it $100/share) FP = .99 (99% chance of failure) FV = $2 (Zitel heading DOWN if Matridigm does nothing) Plug it in and you get .01100+.992 = 3 dollars /share So