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

question 24

Multiple Choice

The distribution of returns, measured over a short interval of time, like daily returns, can be approximated by:

• A) Normal distribution
• B) Lognormal distribution
• C) Binomial distribution
• D) none of the above

Identify strategies for saving and borrowing in different interest rate environments.

Understand how to avoid high fees and unfair practices in financial borrowing.

Understand different types of savings plans and their benefits.

Comprehend the concepts of compounding interest and how it affects savings.

---

Definitions:

Price Discrimination

It's a strategy where a single seller sets different prices for goods or services that are identical or almost identical, depending on the market.

Dilemma of Regulation

The challenge of finding the right balance in regulatory policies, where too much regulation can stifle innovation and economic growth, while too little can lead to market failures and exploitation.

Natural Monopolies

Situations in which a single firm can supply a good or service to an entire market more efficiently than multiple firms could, often due to high infrastructure costs making competition impractical.

Allocative Efficiency

An economic state where resources are allocated in a way that maximizes the net benefit to society, considering both production and desires of consumers.