The Distribution of Returns, Measured Over a Short Interval of Time

question 62

Multiple Choice

The distribution of returns, measured over a short interval of time, such as daily returns, is best approximated by the

• A)normal distribution.
• B)lognormal distribution.
• C)binomial distribution.
• D)uniform distribution.

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Definitions:

Fixed Exchange-rate System

A currency value regime where a country's currency is pegged at a set value to another currency, a basket of currencies, or a commodity like gold.

Foreign Exchange Market

A global decentralized or over-the-counter market for trading currencies, facilitating international trade and investment.

Peg

Fixing the exchange rate of a currency by linking it to another currency or basket of currencies.

Fixed Exchange Rates

A currency system where the value of a country's currency is pegged to another currency, a basket of currencies, or a commodity like gold, minimizing fluctuations in exchange rates.