For Log-Normally Distributed Returns the Annul Compound Returns Is Equal

question 17

Multiple Choice

For log-normally distributed returns the annul compound returns is equal to:

• A) the arithmetic average returns minus half the variance
• B) the arithmetic average returns plus half the variance
• C) the arithmetic average returns minus half the standard deviation
• D) the arithmetic average returns plus half the standard deviation

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Definitions:

Graphic Rating Scales

Graphic rating scales are tools used in performance appraisals where employees are rated on a scale for various competencies or behaviors.

Halo Errors

Halo Errors occur in performance assessments when the evaluator's overall impression of an individual influences their judgment on specific attributes or tasks.

Distributional Errors

Mistakes made in performance appraisals where ratings are clustered at a particular area of the scale, failing to accurately reflect the actual distribution of performance.

Leniency Error

Leniency error occurs in the assessment process when an evaluator consistently rates individuals more positively than their performance warrants, often due to a desire to avoid conflict or to be perceived as favorable.