If the Stock Price Follows a Random Walk, Successive Price

question 2

Multiple Choice

If the stock price follows a random walk, successive price changes are statistically independent. If σ² is the variance of the daily price change, and there are t days until expiration, the variance of the cumulative price change is

• A)σ²
• B)(σ²)× (t).
• C)(σ²)/t.
• D)(σ²)× (t²).

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Definitions:

Maslow's Needs

Refers to Maslow's hierarchy of needs, a motivational theory in psychology comprising a five-tier model of human needs, from basic (physiological) to advanced (self-actualization).

Holistic-Dynamic Theory

A theory suggesting individuals are unified beings who should be understood in terms of their dynamic relationships within a whole context, often emphasizing the importance of motivation and personal growth.

Maslow's Needs

A hierarchy of human needs proposed by Abraham Maslow, progressing from basic physical needs to complex psychological growth demands.

Holistic-Dynamic Theory

A psychological theory that emphasizes the importance of whole-person integration and dynamic interactions within the individual's personality and experiences.